Cognitive coherence and tort reform

Claudia Landeo

Journal of Economic Psychology, 2009, vol. 30, issue 6, 898-912

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)
Date: 2009
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:30:y:2009:i:6:p:898-912

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