Tort Reform, Disputes and Belief Formation

Claudia M. Landeo ()

MPRA Paper from University Library of Munich, Germany

Abstract: We experimentally study the effects of the split-award tort reform, where the state takes a share of the plaintiff's punitive damage award, on litigants' beliefs and bargaining outcomes. In addition, we study the formation of litigants' beliefs in a strategic environment. Our results provide support for coherence-based reasoning theories: coherence shifts in litigants' background beliefs (elicited before a role is assigned and after commitment to a choice at the pretrial bargaining stage) suggest bi-directionality between choices and beliefs. Our findings also suggest role-specific bias in the updating of plaintiffs' beliefs about firm's negligence. Finally, our findings indicate that split-awards affect plaintiffs' beliefs about fairness and lower out-of-court settlement amounts.

Keywords: Tort Reform; Belief Formation; Split-Award Statute; Coherence-Based-Reasoning; Role-Specific Bias; Self-Serving Bias; Motivated Reasoning; Settlement; Litigation; Experiments; Debiasing through Law (search for similar items in EconPapers)
JEL-codes: C9 K0 K13 A12 D83 K41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2009-02
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Related works:
Working Paper: Tort Reform, Disputes and Belief Formation (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:13453

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