Game Theory And Its Application In Legal Negotiations

Legal negotiation is increasingly becoming one of the important dispute settlement mechanism in our country. Legal negotiation is a kind of interactive behaviors. Game theory studying on human behaviors is an important analysis tool of legal negotiation. This paper tries to apply the game theory to the practice of law, uses game model to describe the legal negotiation parties behaviors and behavioral outcomes, clarify the logic relation between behaviors and results, and tries to use Nash equilibrium to explore the best way of conciliation.The result of the negotiation is reflected by the contract. The Penalty terms of the contract is the guarantee of parties to abide by the contract obligations and realize the right. Applying Dominant equilibrium theory, can help the parties to analyze the constraint function of the agreement about the punishment for breach of contract scientifically, and determine the reasonable interval of the default cost.The parties can apply Extensive form games to analyze which is the better way to meet the psychological expectations between reconciliation and procedure, and get rational bargaining interval of compensation to the victim. The parties can gain more interests by controlling the bargaining interval variables. These methods can be used in wage compensation disputes, contract disputes, civil tort disputes and other civil disputes, minor criminal cases and criminal cases of private prosecution.The parties always dispute on the valuation and allocation about property in enterprise liquidation case, heritage case and divorce cases. The parties can identify the property division efficiently by establishing a new rules of the game.The Game theory also can be used to solve problem about the distribution of the ownership of goods and the right of disposal. These goods or matteres always have litter difference in value or cannot be estimated, but they have special significance for the parties.This paper is divided into four parts according to the logic reasoning.Introduction:Raising the topic and significance of research, and summing up the related literature including Legal negotiation and Game theory.PartⅠ:Introduce the general principles of Game theory, including the development process, basic concepts, foundation of analysis, and makes a brief comparative analysis between Normal form games and Extensive form games.PartⅡ:Introduce the concept and characteristics of legal negotiation, and states its practical significance.PartⅢ:Discuss the application of Game theory to Legal negotiation. The main content includes the following four parts:(1)applying Dominant equilibrium theory to set penalty terms of contract reasonable;(2)using Subgame perfect Nash equilibrium to analyze the reconciliation interval;(3)establishing a new game model to realize reasonable valuation and allocation about property;(4)discusses how to use Game theory to realize reasonable distribution of the ownership of goods and the right of disposal.