This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Settlement Negotiations with Two-Sided Asymmetric Information: Model Duality, Information Distribution and Efficiency

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Andrew F. Daughety (Economics)
Jennifer F. Reinganum (Univ. of Iowa)

Additional information is available for the following registered author(s):

Abstract

We analyze a settlement and litigation game in which both parties possess private information relevant to the value of a claim. The plaintiff knows the level of damages, while the defendant knows the probability he will be held liable for those damages. We consider two alternatives: (1) the plaintiff proposes a settlement, which the defendant accepts or rejects; and (2) the defendant proposes a settlement, which the plaintiff accepts or rejects. Despite the extensive symmetry of the model, these alternatives will generally result in different equilibrium expected frequencies of trial, and therefore different social efficiencies.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://129.3.20.41/eps/game/papers/9403/9403009.ps.gz
File Format: application/postscript
File Function:
Download Restriction: no
File URL: http://129.3.20.41/eps/game/papers/9403/9403009.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 9403009.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 22 pages
Date of creation: 31 Mar 1994
Date of revision:
Handle: RePEc:wpa:wuwpga:9403009

Note: Zipped using PKZIP v2.04, encoded using UUENCODE v5.15. Zipped file includes 1 file -- 2sided.941 (body in WP5.1, 22 pages)
Contact details of provider:
Web page: http://129.3.20.41

For technical questions regarding this item, or to correct its listing, contact: (EconWPA).

Related research
Keywords:

Other versions of this item:

Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. McFadden, Daniel, 1978. "Cost, Revenue, and Profit Functions," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 1 McMaster University Archive for the History of Economic Thought. [Downloadable!]
  2. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  3. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 54(3), pages 345-64, July. [Downloadable!] (restricted)
  4. Rubinstein, Ariel, 1985. "A Bargaining Model with Incomplete Information about Time Preferences," Econometrica, Econometric Society, vol. 53(5), pages 1151-72, September. [Downloadable!] (restricted)
  5. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn. [Downloadable!] (restricted)
  6. Samuelson, L., 1988. "Disagreement In Markets With Matching And Bargaining," Papers 9-86-1, Pennsylvania State - Department of Economics.
  7. Gale, Douglas M, 1986. "Bargaining and Competition Part I: Characterization," Econometrica, Econometric Society, vol. 54(4), pages 785-806, July. [Downloadable!] (restricted)
  8. Gale, Douglas M, 1986. "Bargaining and Competition Part II: Existence," Econometrica, Econometric Society, vol. 54(4), pages 807-18, July. [Downloadable!] (restricted)
  9. Perry, Motty, 1986. "An Example of Price Formation in Bilateral Situations: A Bargaining Model with Incomplete Information," Econometrica, Econometric Society, vol. 54(2), pages 313-21, March. [Downloadable!] (restricted)
  10. Sobel, Joel & Takahashi, Ichiro, 1983. "A Multistage Model of Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 50(3), pages 411-26, July. [Downloadable!] (restricted)
  11. Lawrence M. Ausubel & Peter Cramton & Raymond J. Deneckere, 2002. "Bargaining with Incomplete Information," Papers of Peter Cramton 02barg, University of Maryland, Department of Economics - Peter Cramton, revised 12 Mar 2001. [Downloadable!]
    Other versions:
  12. Gale, Douglas, 1987. "Limit theorems for markets with sequential bargaining," Journal of Economic Theory, Elsevier, vol. 43(1), pages 20-54, October. [Downloadable!] (restricted)
  13. Samuelson, Larry, 1992. "Disagreement in Markets with Matching and Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 177-85, January. [Downloadable!] (restricted)
  14. Salant, Stephen W., 1984. "Litigation of Settlement Demands Questioned by Bayesian Defendants," Working Papers 516, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  15. Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March. [Downloadable!] (restricted)
    Other versions:
  16. Binmore, Ken G & Herrero, M J, 1988. "Security Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 55(1), pages 33-48, January. [Downloadable!] (restricted)
  17. Fudenberg, Drew & Tirole, Jean, 1983. "Sequential Bargaining with Incomplete Information," Review of Economic Studies, Blackwell Publishing, vol. 50(2), pages 221-47, April. [Downloadable!] (restricted)
  18. Rubinstein, Ariel & Wolinsky, Asher, 1990. "Decentralized Trading, Strategic Behaviour and the Walrasian Outcome," Review of Economic Studies, Blackwell Publishing, vol. 57(1), pages 63-78, January. [Downloadable!] (restricted)
  19. Reinganum, Jennifer F, 1988. "Plea Bargaining and Prosecutorial Discretion," American Economic Review, American Economic Association, vol. 78(4), pages 713-28, September. [Downloadable!] (restricted)
    Other versions:
  20. Spier, Kathryn E, 1992. "The Dynamics of Pretrial Negotiation," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 93-108, January. [Downloadable!] (restricted)
  21. Schweizer, Urs, 1989. "Litigation and Settlement under Two-Sided Incomplete Information," Review of Economic Studies, Blackwell Publishing, vol. 56(2), pages 163-77, April. [Downloadable!] (restricted)
  22. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October. [Downloadable!] (restricted)
  23. Cramton, Peter C, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 205-25, January. [Downloadable!] (restricted)
    Other versions:
  24. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-61, May. [Downloadable!] (restricted)
    Other versions:
  25. Daughety, Adnrew F & Reinganum, Jennifer F, 1993. "Endogenous Sequencing in Models of Settlement and Litigation," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(2), pages 314-48, October.
    Other versions:
  26. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-50, September. [Downloadable!] (restricted)
  27. Steven Shavell, 1981. "Suit and Settlement vs. Trial: A Theoretical Analysis under Alternative Methods for the Allocation of Legal Costs," NBER Working Papers 0662, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  28. I.P.L. P'ng, 1983. "Strategic Behavior in Suit, Settlement, and Trial," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 539-550, Autumn. [Downloadable!] (restricted)
  29. Andrew F. Daughety & Jennifer F. Reinganum, 1995. "Keeping Society in the Dark: On the Admissibility of Pretrial Negotiations as Evidence in Court," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 203-221, Summer. [Downloadable!] (restricted)
    Other versions:
  30. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 557-566, Winter. [Downloadable!] (restricted)
  31. Binmore, Ken G & Herrero, M J, 1988. "Matching and Bargaining in Dynamic Markets," Review of Economic Studies, Blackwell Publishing, vol. 55(1), pages 17-31, January. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Álvaro Bustos & Ronen Avraham., 2008. "The Unexpected Effects of Caps on Non-Economic Damages," Documentos de Trabajo 353, Instituto de Economía. Pontificia Universidad Católica de Chile.. [Downloadable!]
  2. Pao-Li Chang, 2002. "The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism," Working Papers 475, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  3. Bertrand Chopard & Thomas Cortade & Eric Langlais, 2008. "Trial and settlement negotiations between asymmetrically skilled parties," EconomiX Working Papers 2008-32, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
    Other versions:
  4. Langlais, Eric, 2005. "Indemnisation des préjudices et fréquence des procès en présence d'une asymétrie d'informaion sur l'aversion au risque des parties
    [Compensation of damages and frequency of trials with asymmet
    ," MPRA Paper 1150, University Library of Munich, Germany, revised 06 Nov 2006. [Downloadable!]
    Other versions:
  5. Chris William Sanchirico, 2004. "Games, Information, and Evidence Production: With Application to English Legal History," Law and Economics 0403002, EconWPA. [Downloadable!]
  6. Langlais, Eric, 2008. "Cognitive dissonance, risk aversion and the pretrial negotiation impasse," MPRA Paper 8844, University Library of Munich, Germany. [Downloadable!]
  7. Philippe Choné & Laurent Linnemer, 2008. "Optimal Litigation Strategies with Signaling and Screening," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  8. Douglas Cumming, 2001. "Settlement Disputes: Evidence from a Legal Practice Perspective," European Journal of Law and Economics, Springer, vol. 11(3), pages 249-280, May. [Downloadable!] (restricted)
Statistics
Access and download statistics

Did you know? IDEAS also covers the most complete directory of Economics departments and institutes, EDIRC.

This page was last updated on 2009-11-5.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.