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 language | English (US) |
|---|---|
| Pages (from-to) | 143-170 |
| Number of pages | 28 |
| Journal | Journal of Institutional and Theoretical Economics |
| Volume | 174 |
| Issue number | 1 |
| DOIs | |
| State | Published - Mar 2018 |
Funding
This article attempts to contribute to the empirical and theoretical literature on litigation, settlement, and selection by analyzing a unique data set. For the last few decades, New York courts have required contingent-fee lawyers to file closing * Eric Helland: Claremont McKenna College, Claremont (CA), U.S.A.; Daniel Kler-man (corresponding author): University of Southern California Gould School of Law, Los Angeles (CA), U.S.A.; Yoon-Ho Alex Lee: Northwestern Pritzker School of Law, Chicago (IL), U.S.A. The authors are grateful for comments and suggestions to Jonah Gelbach, Urs Schweizer, Martin Wells, and participants in the Empirical Methods for the Law seminar sponsored by the Max Planck Institute for Research on Collective Goods and the University of Bonn.
Keywords
- Asymmetric information
- Divergent expectations
- Inconsistent priors
- Klein
- Litigation
- Priest
- Screening
- Selection
- Settlement
- Signaling
ASJC Scopus subject areas
- Economics and Econometrics