 A unified model of settlement and trial expenditures: The PriestâKlein model extendedMarc Poitras and Ralph Frasca International Review of Law and Economics, 2011, vol. 31, issue 3, 188-195 Abstract: Settlement and trial expenditures are crucially interrelated. The literature on settlement, however, takes no account of models of trial. In this paper, we develop a unified model of settlement and trial expenditures. We do this by discarding the usual assumption of settlement models that trial costs are constant across cases. Instead, we follow the literature on trial by permitting trial costs to vary with the legal merit of the plaintiff's case. Our approach can be used to extend standard models of settlement such as the well-known PriestâKlein model as well as models based on asymmetric information. As a demonstration, we extend the PriestâKlein model and generally overturn that model's canonical results. In particular, we show that even in a fully symmetric model, predicted win rates at trial can deviate substantially from 50 percent. Furthermore, win rates will vary in response to legal reforms that shift the decision standard. Keywords: Trial; expenditures; Settlement; Case; selection; Priest-Klein; Model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:31:y:2011:i:3:p:188-195 Access Statistics for this article International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer More articles in International Review of Law and Economics from Elsevier |
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