Maybe there Is No Bias in the Selection of Disputes for Litigation

Eric Helland, Daniel Klerman and Yoon-Ho Alex Lee

Journal of Institutional and Theoretical Economics (JITE), 2018, vol. 174, issue 1, 143-170

Abstract: New York closing-statement data provide unique insight into settlement and selection. The distributions of settlements and adjudicated damages are remarkably similar, and the average settlement is very close to the average judgment. One interpretation is that selection effects may be small or nonexistent. Because existing litigation models all predict selection bias, we develop a simple, no-selection-bias model that is consistent with the data. Nevertheless, we show that the data can also be explained by generalized versions of screening, signaling, and Priest-Klein models.

Keywords: litigation; settlement; selection; asymmetric information; screening; signaling; Priest; Klein; inconsistent priors; divergent expectations (search for similar items in EconPapers)
JEL-codes: K41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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DOI: 10.1628/093245618X15115174056060

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