Litigation - Loser Pays

This is one thing which has puzzled me since I have been in America - the number of law suite ! I still remember a line from 'Philadelphia' where Tom Hanks is arguing with a judge and presents his closing line as 'This is an example of how frivalous litigation threatens to damage the ver fabric of American Society'.

Jim's entry on 'Loser Pays' this really piqued my interest.

It references this interesting paper on Auction Theoritic Framework -(Warning - slightly dense reading )