Maybe there is no bias in the selection of disputes for litigation

Eric Helland, Daniel Klerman*, Yoon Ho Alex Lee

*Corresponding author for this work

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

New York closing-statement data provide unique insight into settlement and selection. The distributions of settlements and adjudicated damages are remarkably similar, and the average settlement is very close to the average judgment. One interpretation is that selection effects may be small or nonexistent. Because existing litigation models all predict selection bias, we develop a simple, no-selection-bias model that is consistent with the data. Nevertheless, we show that the data can also be explained by generalized versions of screening, signaling, and Priest– Klein models.

Original languageEnglish (US)
Pages (from-to)143-170
Number of pages28
JournalJournal of Institutional and Theoretical Economics
Volume174
Issue number1
DOIs
StatePublished - Mar 2018

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Keywords

  • Asymmetric information
  • Divergent expectations
  • Inconsistent priors
  • Klein
  • Litigation
  • Priest
  • Screening
  • Selection
  • Settlement
  • Signaling

ASJC Scopus subject areas

  • Economics and Econometrics

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