IDEAS home Printed from https://ideas.repec.org/a/eee/irlaec/v41y2015icp77-85.html
   My bibliography  Save this article

The dynamics of one-sided incomplete information in motor disputes

Author

Listed:
  • Ayuso, Mercedes
  • Bermúdez, Lluís
  • Santolino, Miguel

Abstract

The paper examines the distribution function of settlements over time in an attempt to explain the time it takes to negotiate the claim compensation in the context of motor disputes. Competing risk models are applied to a Spanish motor insurance database. The empirical analysis yielded two main findings. First, in some cases the severity of temporary injuries was found to be negatively associated with the time to settlement of the claim, suggesting that more severe cases do not always take longer to settle; this supports the assumption that the time to settlement depends primarily on the degree of informational asymmetry among litigants regarding the magnitude of damages. Second, time-varying effects were observed for the explanatory factors related to the victim's age and the seriousness of injuries. The effect of these factors on the time to settlement of the claim is attenuated over time, suggesting that the asymmetries in information present a dynamic pattern during the negotiation process, since the insurer's incomplete information is enriched during the course of negotiations.

Suggested Citation

  • Ayuso, Mercedes & Bermúdez, Lluís & Santolino, Miguel, 2015. "The dynamics of one-sided incomplete information in motor disputes," International Review of Law and Economics, Elsevier, vol. 41(C), pages 77-85.
    • Handle: RePEc:eee:irlaec:v:41:y:2015:i:c:p:77-85
    DOI: 10.1016/j.irle.2014.11.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0144818814000829
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irle.2014.11.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Doornik, Katherine, 2014. "A rationale for mediation and its optimal use," International Review of Law and Economics, Elsevier, vol. 38(C), pages 1-10.
    2. Kathryn E. Spier, 1992. "The Dynamics of Pretrial Negotiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 93-108.
    3. Mercedes Ayuso & Lluís Bermúdez & Miguel Santolino, 2012. "Influence of parties' behavioural features on motor compensation disputes in insurance markets," Journal of Risk Research, Taylor & Francis Journals, vol. 15(6), pages 673-691, June.
    4. Pucher, J. & Dijkstra, L., 2003. "Promoting Safe Walking and Cycling to Improve Public Health: Lessons from The Netherlands and Germany," American Journal of Public Health, American Public Health Association, vol. 93(9), pages 1509-1516.
    5. Santolino, Miguel, 2010. "Determinants of the decision to appeal against motor bodily injury judgements made by Spanish trial courts," International Review of Law and Economics, Elsevier, vol. 30(1), pages 37-45, March.
    6. Deffains, Bruno & Doriat, Myriam, 1999. "The dynamics of pretrial negotiation in France:: Is there a deadline effect in the French legal system?," International Review of Law and Economics, Elsevier, vol. 19(4), pages 447-470, December.
    7. 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.
    8. Daniel Friedman & Donald Wittman, 2007. "Litigation with Symmetric Bargaining and Two-Sided Incomplete Information," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(1), pages 98-126, April.
    9. Browne, Mark J & Puelz, Robert, 1999. "The Effect of Legal Rules on the Value of Economic and Non-economic Damages and the Decision to File," Journal of Risk and Uncertainty, Springer, vol. 18(2), pages 189-213, August.
    10. Scheike, Thomas H. & Zhang, Mei-Jie, 2011. "Analyzing Competing Risk Data Using the R timereg Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 38(i02).
    11. Daughety, Andrew F. & Reinganum, Jennifer F., 1994. "Settlement negotiations with two-sided asymmetric information: Model duality, information distribution, and efficiency," International Review of Law and Economics, Elsevier, vol. 14(3), pages 283-298, September.
    12. Thomas H. Scheike & Mei-Jie Zhang & Thomas A. Gerds, 2008. "Predicting cumulative incidence probability by direct binomial regression," Biometrika, Biometrika Trust, vol. 95(1), pages 205-220.
    13. Joel Sobel & Takahashi, 1983. "A Multi-stage Model of Bargaining," Levine's Working Paper Archive 255, David K. Levine.
    14. Helen I. Doerpinghaus & Joan T. Schmit & Jason Jia‐Hsing Yeh, 2008. "Age and Gender Effects on Auto Liability Insurance Payouts," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(3), pages 527-550, September.
    15. Fenn, Paul & Rickman, Neil, 1999. "Delay and Settlement in Litigation," Economic Journal, Royal Economic Society, vol. 109(457), pages 476-491, July.
    16. Mercedes Ayuso & Miguel Santolino, 2012. "Forecasting the Maximum Compensation Offer in the Automobile BI Claims Negotiation Process," Group Decision and Negotiation, Springer, vol. 21(5), pages 663-676, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2017. "Understanding the Time to Court Case Resolution: A Competing Risks Analysis Using Belgian Data," CESifo Working Paper Series 6450, CESifo.
    2. Peter Grajzl & Katarina Zajc, 2017. "Litigation and the timing of settlement: evidence from commercial disputes," European Journal of Law and Economics, Springer, vol. 44(2), pages 287-319, October.
    3. Bielen, Samantha & Grajzl, Peter & Marneffe, Wim, 2017. "Procedural events, judge characteristics, and the timing of settlement," International Review of Law and Economics, Elsevier, vol. 52(C), pages 97-110.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Grajzl & Katarina Zajc, 2017. "Litigation and the timing of settlement: evidence from commercial disputes," European Journal of Law and Economics, Springer, vol. 44(2), pages 287-319, October.
    2. Luke Garrod & Bruce Lyons, 2011. "Early Settlement and Errors in Merger Control," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2011-05, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    3. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2017. "Understanding the Time to Court Case Resolution: A Competing Risks Analysis Using Belgian Data," CESifo Working Paper Series 6450, CESifo.
    4. Mercedes Ayuso & Lluís Bermúdez & Miguel Santolino, 2011. "“Influence of the claimant’s behavioural features on motor compensation outcomes”," IREA Working Papers 201108, University of Barcelona, Research Institute of Applied Economics, revised Jun 2011.
    5. Chopard, Bertrand & Cortade, Thomas & Langlais, Eric, 2010. "Trial and settlement negotiations between asymmetrically skilled parties," International Review of Law and Economics, Elsevier, vol. 30(1), pages 18-27, March.
    6. Heyes, Anthony & Rickman, Neil & Tzavara, Dionisia, 2004. "Legal expenses insurance, risk aversion and litigation," International Review of Law and Economics, Elsevier, vol. 24(1), pages 107-119, March.
    7. Miguel Santolino & Catalina Bolancé & Manuela Alcañiz, 2011. "Factors affecting hospital admission and recovery stay duration of in-patient motor victims in Spain," IREA Working Papers 201119, University of Barcelona, Research Institute of Applied Economics, revised Oct 2011.
    8. Francesc Dilmé, 2021. "The Role of Discounting in Bargaining with One-Sided Offers," ECONtribute Discussion Papers Series 063, University of Bonn and University of Cologne, Germany.
    9. Sanchez-Pages, Santiago, 2009. "Bargaining and Conflict with Incomplete Information," SIRE Discussion Papers 2009-55, Scottish Institute for Research in Economics (SIRE).
    10. Zhou, J., 2010. "Access to justice : An economic approach," Other publications TiSEM 9d70f451-35c4-4878-92bf-7, Tilburg University, School of Economics and Management.
    11. Giorgio Rampa & Margherita Saraceno, 2023. "Conjectures and underpricing in repeated mass disputes with heterogeneous plaintiffs," Journal of Economics, Springer, vol. 139(1), pages 1-32, June.
    12. Deffains, Bruno & Doriat, Myriam, 1999. "The dynamics of pretrial negotiation in France:: Is there a deadline effect in the French legal system?," International Review of Law and Economics, Elsevier, vol. 19(4), pages 447-470, December.
    13. Choné, Philippe & Linnemer, Laurent, 2010. "Optimal litigation strategies with observable case preparation," Games and Economic Behavior, Elsevier, vol. 70(2), pages 271-288, November.
    14. Miguel Santolino & Magnus Söderberg, 2014. "Modelling appellate courts’ responses in motor injury disputes," European Journal of Law and Economics, Springer, vol. 38(3), pages 393-407, December.
    15. Daughety, Andrew F. & Reinganum, Jennifer F., 1994. "Settlement negotiations with two-sided asymmetric information: Model duality, information distribution, and efficiency," International Review of Law and Economics, Elsevier, vol. 14(3), pages 283-298, September.
    16. Santolino, Miguel, 2010. "Determinants of the decision to appeal against motor bodily injury judgements made by Spanish trial courts," International Review of Law and Economics, Elsevier, vol. 30(1), pages 37-45, March.
    17. Ormosi, Peter L., 2012. "Tactical dilatory practice in litigation: Evidence from EC merger proceedings," International Review of Law and Economics, Elsevier, vol. 32(4), pages 370-377.
    18. Anne Duchêne, 2017. "Patent Litigation Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(2), pages 631-660, June.
    19. Dari-Mattiacci, Giuseppe & Saraceno, Margherita, 2020. "Fee shifting and accuracy in adjudication," International Review of Law and Economics, Elsevier, vol. 63(C).
    20. Lee, Yoon-Ho Alex & Klerman, Daniel, 2016. "The Priest-Klein hypotheses: Proofs and generality," International Review of Law and Economics, Elsevier, vol. 48(C), pages 59-76.

    More about this item

    Keywords

    Litigation; Uncertainty; Cumulative incidence function; Settlement delay; Private information; Mediation;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:41:y:2015:i:c:p:77-85. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/irle .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.