Settlement negotiations with two-sided asymmetric information: Model duality, information distribution, and efficiency

Daughety, Andrew F.; Reinganum, Jennifer F.

doi:10.1016/0144-8188(94)90044-2

Cited by 92 publications

(42 citation statements)

References 28 publications

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“…However, the model does not explain the underlying reason for parties' divergent beliefs and does not clarify the structure of settlement bargaining. Accordingly, more recent literature (see, e.g., P'ng 1983, Bebchuk 1984, Nalebuff 1987, Reinganum and Wilde 1986, Spier 1992, Daughety and Reinganum 1994, Friedman and Wittman 2007 emphasizes informational asymmetries as a source of parties' divergent expectations and explicitly models settlement bargaining.…”

Section: Theorymentioning

confidence: 99%

Litigation and the timing of settlement: evidence from commercial disputes

Grajzl

Zajc

2016

Eur J Law Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Although an overwhelming proportion of all legal disputes end in settlement, the determinants of the timing of settlement remain empirically underexplored. We draw on a novel dataset on the duration of commercial disputes in Slovenia to study how the timing of settlement is shaped by the stages and features of the litigation process. Using competing risk regression analysis, we find that events such as court-annexed mediation and the first court session, which enable the disputing parties to refine their respective expectations about the case outcome, in general reduce case duration to settlement. The magnitude of the respective effects, however, varies with time. Completion of subsequent court sessions, in contrast, does not affect the time to settlement. Judicial workload affects the timing of settlement indirectly, via the effect on the timing of the first court session. We also examine the effect of other case and party characteristics. Terms of use: Documents inJEL-Code: K410, K490, D020.

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Section: Theorymentioning

confidence: 99%

Litigation and the timing of settlement: evidence from commercial disputes

Grajzl

Zajc

2016

Eur J Law Econ

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“…A more recent and comprehensive survey of this topic is provided by Daughety and Reinganum (2012), who systematize a large number of contributions ranging from axiomatic models to those based on a strategic approach. 2 Mainly, this kind of literature analyzes the reasons why parties in conflict fail in their negotiations and, subsequently, their cases go in trial.…”

Section: Litigation Versus Settlement (In the Shadow Of The Court)mentioning

confidence: 99%

“…4 Besides the literature on settlement, see also contributions vis-à-vis alternative dispute resolution (e.g., Shavell 1995). 5 Settlement is often designed as an ultimatum game in one round, as seen in, for example, Bebchuk (1984), P'ng (1983), andReinganum andWilde (1986). On multiple-round settlement, see Spier (1992) and Wang et al (1994).…”

Section: Litigation Versus Settlement (In the Shadow Of The Court)mentioning

confidence: 99%

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Justice: Greater Access, Lower Costs

Saraceno

2014

SSRN Journal

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General rightsIt is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). Disclaimer/Complaints regulationsIf you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: http://uba.uva.nl/en/contact, or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible. AbstractLitigation imposes large costs on society; this justifies settlement considerations. In any case, access to justice is critical to socioeconomic development; as such, it needs to be balanced with litigation minimization. This study examines the tradeoff between litigation and access to justice and explicitly elucidates their relationship. In considering access issues, this study finds that the outcomes of policies that affect parties' litigation decisions partially depart from those in the standard literature. For instance, increasing parties' litigation costs does not necessarily promote settlement in the shadow of the court.Rather, effects depend on the elasticity of the demand for legal remedies. Furthermore, even while pushing litigation, enhancing access to justice is efficient as long as the claimant's marginal propensity to litigate is smaller than the social opportunity-cost of access to justice. This finding offers further insight into the suitability of litigation subsidization through legal aid.JEL classification: K41.

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“…In a recent review article, Daughety (2000) lists over 50 articles on litigation and settlement. A natural question is to ask is how the present paper distinguishes itself from this intellectual thicket.…”

Section: Introductionmentioning

confidence: 99%

Litigation with Symmetric Bargaining and Two-Sided Incomplete Information

Friedman

Wittman

2006

Journal of Law, Economics, and Organization

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Abstract.We construct game theoretic foundations for bargaining in the shadow of a trial. Plaintiff and defendant both have noisy signals of a common-value trial judgment and make simultaneous offers to settle. If the offers cross, they settle on the average offer; otherwise, both litigants incur an additional cost and the judgment is imposed at trial. We obtain an essentially unique NE and characterize its conditional trial probabilities and judgments. Some of the results are intuitive, e.g., an increase in trial cost (or a decrease in the range of possible outcomes) reduces the probability of a trial. Other results reverse findings from previous literature. For example, trials are possible even when the defendant's signal indicates a higher potential judgment than the plaintiff's signal, and when trial costs are low, the middling cases (rather than the extreme cases) are more likely to settle.

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Settlement negotiations with two-sided asymmetric information: Model duality, information distribution, and efficiency

Cited by 92 publications

References 28 publications

Litigation and the timing of settlement: evidence from commercial disputes

Litigation and the timing of settlement: evidence from commercial disputes

Justice: Greater Access, Lower Costs

Litigation with Symmetric Bargaining and Two-Sided Incomplete Information

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