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Costly pretrial agreements

Luca Anderlini, Leonardo Felli () and Giovanni Immordino ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Settling a legal dispute involves some costs that the parties have to incur ex ante for the pretrial negotiation and possible agreement to become feasible. Even in a full-information world, if the distribution of these costs is sufficiently mismatched with the distribution of the parties’ bargaining powers, a pretrial agreement may never be reached even though litigation is overall wasteful. Our results shed light on two key issues. First, a plaintiff may initiate a lawsuit even though the parties fully anticipate that it will be settled out of court. Second, the likelihood that a given lawsuit goes to trial is unaffected by how trial costs are distributed among the litigants. The choice of fee-shifting rule can affect only whether the plaintiff files a lawsuit in the first place. It does not affect whether it is settled before trial or litigated.

Keywords: Pretrial Agreements; Costly Negotiations; Court Litigation (search for similar items in EconPapers)
JEL-codes: C79 D23 D86 K12 K13 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2019-01-01
New Economics Papers: this item is included in nep-gth, nep-law and nep-mic
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Published in Journal of Legal Studies, 1, January, 2019, 48(1), pp. 159 - 188. ISSN: 0047-2530

Downloads: (external link)
http://eprints.lse.ac.uk/89255/ Open access version. (application/pdf)

Related works:
Journal Article: Costly Pretrial Agreements (2019) Downloads
Working Paper: Costly Pretrial Agreements (2018) Downloads
Working Paper: Costly Pre-Trial Agreements (2018) Downloads
Working Paper: Costly Pretrial Agreements (2016) Downloads
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