Abstract:
We model the settlement and litigation process, allowing for incomplete information about the level of damages (incurred by the plaintiff) on the part of both the defendant and the court, and use the model to examine the effect of making (currently inadmissible) settlement demands admissible as evidence in court should a case proceed to trial. Two conclusions emerge. First, admissibility rules have efficiency consequences: making a pretrial demand admissible would increase the expected number of cases that go to trial. Second, such rules have distributional consequences and need not benefit all parties to a controversy. As an example, in product liability cases consumers are likely to favor inadmissibility, while corporations will favor the reverse.
JEL-codes:C7D8 (search for similar items in EconPapers) Date: Written Note: Zipped using PKZIP v2.04, encoded using UUENCODE v5.15. Zipped file includes 1 file -- Admissbl.fnl (body in WP5.1, 40 pages) View list of references