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Antitrust Settlements and Trial Outcomes

Jeffrey Perloff, Daniel L Rubinfeld and Paul Ruud

The Review of Economics and Statistics, 1996, vol. 78, issue 3, 401-09

Abstract: Risk aversion plays an important role in explaining why antitrust cases settle instead of going to trial. Using a jointly estimated model of settlement and trial outcome, the authors find that a one percent increase in the probability that the plaintiff wins at trial raises the probability of a settlement by 0.13 percent. They also find that reputation effects are not a significant factor for defendants, so the risk aversion of the defendants does not play a dominant role in determining whether the parties settle. Plaintiffs are more likely to win in certain jurisdictions, which encourages venue shopping by plaintiffs. Copyright 1996 by MIT Press.

Date: 1996
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