Cognitive coherence and tort reform
AbstractWe experimentally study the effects of the split-award tort reform, where the state takes a share of the plaintiff's punitive damage award, on litigants' beliefs and bargaining outcomes. In addition, we study the formation of litigants' beliefs in a strategic environment. Our results provide support for coherence-based reasoning theories: coherence shifts in litigants' background beliefs (elicited before a role is assigned and after commitment to a choice at the pretrial bargaining stage) suggest bi-directionality between choices and beliefs. Our findings also suggest role-specific bias in the updating of plaintiffs' beliefs about firm's negligence. Finally, our findings indicate that split-awards affect plaintiffs' beliefs about fairness and lower out-of-court settlement amounts.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Psychology.
Volume (Year): 30 (2009)
Issue (Month): 6 (December)
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Web page: http://www.elsevier.com/locate/joep
Tort reform Belief formation Split-award statute Coherence-based reasoning Role-specific bias Self-serving bias Motivated reasoning Settlement Litigation Experiments Debiasing through law;
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