Costly pretrial agreements
Journal of Legal Studies
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Anderlini, L., Felli, L., & Immordino, G. (2019). Costly pretrial agreements. Journal of Legal Studies, 48 (1)https://doi.org/10.1086/699841
© 2019 by The University of Chicago. All rights reserved. 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.
External DOI: https://doi.org/10.1086/699841
This record's URL: https://www.repository.cam.ac.uk/handle/1810/299183
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