tive. The greater (smaller) the expected benefit, the more likely it is that a complaint will (not) be
brought. From this description, one can note that a complaint is more likely to be brought, (i) the
lower the cost, (ii) the greater the likelihood of winning and (iii) the greater the complainants’
probable reward, provided he wins.58
The individual incentives to launch a complaint can be identified theoretically by assuming ra-
tional behavior of the individual.59 The incentive structure represents that of an assumed average
individual. The benefit of an individual in launching a complaint is narrowly defined as the pri-
vate benefit. Any additional benefit an individual may enjoy by - simultaneously - providing a
collective good such as the controlling of the legality of state behavior or by setting a precedent
is neglected. Furthermore, effects on other individuals within the same situation or group are not
assumed to be relevant for the individual benefit calculus.60 It follows that if a complaint has
only a private aspect, internalization is perfect, whereas if a complaint has collective good as-
pects, the incentive structure is such that the collective good element will be underprovided, as
the individual does not include those in her calculus. Also, the expected net benefit of a proceed-
ing is subjectively estimated; whether an individual will bring a complaint or not depends on
subjective individual loss of benefit by infringement, that is, preference intensity of the individ-
ual may make an important difference. Individuals may not be entirely rational in calculating the
probability of winning a complaint. From behavioral economics it is known that under certain
circumstances people are overoptimistic while under other circumstances loss aversion is emi-
nent.61 Thus, there may be a selection effect between those who have standing and those who
actually bring a complaint.
The benefit upon winning is defined by the benefit derived from the private relief by the award
of the judicial body, being the benefit created by the bodies’ decision in favor of the complain-
ant. The benefit derives from reparation, through the fulfillment of the required action by the
state or through mere satisfaction by a declaratory judgment. The private benefit will generally
be smaller if the judicial body issues only a declaratory judgment.
particularly if the right has a huge collective good aspect. For a general economic analysis on litigation, see
Steven Shavell, Foundations of Economic Analysis of Law, 2004, Cambridge (Mass.), Chapter 17.
58 A more formal presentation concerning benefit would look as follows: E (B) = f (importance of right
infringed, likeliness to win). The award itself is subject to other variables, such as the nature of the award
(e.g. just a statement or view of a violation or awarding damages or injunctions), the legally binding force of
the decision and the probability of enforcement of the decision, see supra at II.
59 An individually felt need for “justice” or “truth” in a case concerning that same individual is considered to be
part of the individual preference function. It is not disputed that other than rational considerations may play a
role in bringing a complaint. There might be individuals who act irrationally in the classical rational-choice
sense, bringing a complaint in spite of negative expected net benefit. This might have several reasons:
bounded rationality, insufficient information, and there might also be a „Michael Kolhaas“-effect, that is,
people might complain because of a general experience of injustice. However, this does not apply for the
average complainant, who is primarily relevant for designing laws. For simplicity, it is assumed that the
complainant is risk-neutral; would she be risk-averse or risk-seeking, the curve would be convex respectively
concave.
60 In the literature, this is often called non-altruistic behavior which means that only the benefit which is
directly reaped by the individual counts.
61 Daniel Kahnemann, “New Challenges to the Rationality Assumption”, Legal Theory 3 (1997), 105-124;
Daniel Kahnemann/Amos Tversky, “Prospect Theory: An Analysis of Decisions under Risk”, Econometrica
47 (1979), 312-327.
16