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Economic Analysis of Pre-trial Negotiations: A Behavioral Approach

Author

Listed:
  • Dandekar Suyog Ravindra

    (School of Economics, University of Hyderabad, Gachi Bowli, Hyderabad, Telangana 500046, India)

  • Raja Angara V.

    (School of Economics, University of Hyderabad, Gachi Bowli, Hyderabad, Telangana 500046, India)

Abstract

The paper provides a behavioral approach to analysis of pre-trial negotiations. This paper differs from earlier studies in that the most likely outcome forms the basis on which the parties assess their benefits and costs. This is based not on precise calculations of expected values, but on the expectations of the parties which depend on assessment of relative strengths of their case. This is modelled as an outcome of an imperfect cognitive process which is characterized by coherence based reasoning and insensitivities to actual probabilities, and legal discovery. Furthermore, the paper identifies factors which affect bargaining power and how bargaining power affects settlement amounts.

Suggested Citation

  • Dandekar Suyog Ravindra & Raja Angara V., 2015. "Economic Analysis of Pre-trial Negotiations: A Behavioral Approach," Asian Journal of Law and Economics, De Gruyter, vol. 6(1), pages 1-21, April.
    • Handle: RePEc:bpj:ajlecn:v:6:y:2015:i:1:p:1-21:n:4
    DOI: 10.1515/ajle-2014-0009
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    References listed on IDEAS

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    1. William M. Landes, 1974. "An Economic Analysis of the Courts," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 164-214, National Bureau of Economic Research, Inc.
    2. Cooter, Robert D & Rubinfeld, Daniel L, 1994. "An Economic Model of Legal Discovery," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 435-463, January.
    3. Wang, Gyu Ho & Kim, Jeong-Yoo & Yi, Jong-Goo, 1994. "Litigation and Pretrial Negotiation under Incomplete Information," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 187-200, April.
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