Pretrial settlement and coercion: An experiment

Pretrial settlements attempts can be either freely chosen by litigating parties or imposed to them, notably by law or by a judge, which renders the settlement stage mandatory in the latter case, as in mandatory mediation procedures. In a lab experiment, we first analyze the determinants of the litigants’ willingness to bargain. Then we investigate the impact of a bargaining obligation on the litigants’ behavior during the negotiation, by varying both the probability that the constraint is enforced and payoff asymmetry between parties. We show that the willingness to bargain depends on one's relative advantage in terms of expected judgment levels (after or instead of a pretrial settlement attempt), on gender and on the probability of being effectively constrained. We also highlight that players who are forced to bargain are more inclined to concessions within the negotiation than the pairs which freely bargain. Finally, we show that forced bargaining leads to more egalitarian agreements. Our results may have important implications in terms of public policy regarding mandatory mediation.