On Plaintiffs’ Strategic Information Acquisition and Disclosure during Discovery

We analyze how a plaintiff acquires damage-level information and discloses it to the defendant during the discovery process when the plaintiff knows that the defendant is privately informed about the plaintiff’s probability of winning at trial. The plaintiff can design the process for generating the damage-level information but cannot omit or misrepresent it. She does this with an understanding of how the defendant’s updated beliefs after the discovery stage will impact pretrial negotiations. We find that the plaintiff prefers full disclosure when deciding between a pooling or a screening settlement demand depends on the damages level. In other scenarios, she is indifferent to how much information the discovery stage conveys about the damage level to the defendant.