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The Economics of Collective Negotiation in Pretrial Bargaining

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  • Yeon-Koo Che

    (University of Wisconsin-Madison, U.S.A.)

Abstract

This article studies the strategic use of collective negotiation in multiplaintiff litigation. Compared with one-on-one negotiation, collective negotiation can change the distribution of per-plaintiff damages in a manner that influences the defendant's bargaining incentive. Informational asymmetry among the members of collective action and delegation of bargaining to a self-interested representative can yield a tougher bargaining position. A plaintiff's decision to join the collective action can signal his type, which in turn influences the defendant's bargaining behavior. In equilibrium, some plaintiffs join the action for fear of sending a bad signal. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 43 (2002)
Issue (Month): 2 (May)
Pages: 549-576

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Handle: RePEc:ier:iecrev:v:43:y:2002:i:2:p:549-576

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Cited by:
  1. Andrew F. Daughety & Jennifer F. Reinganum, 2007. "Mass Torts and the Incentives for Suit, Settlement, and Trial," Vanderbilt University Department of Economics Working Papers 0713, Vanderbilt University Department of Economics.
  2. Dana, James D., 2012. "Buyer groups as strategic commitments," Games and Economic Behavior, Elsevier, vol. 74(2), pages 470-485.

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