The impact of defendant offers into court on negotiation in the shadow of the law: experimental evidence

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The impact of defendant offers into court on negotiation in the shadow of the law: experimental evidence

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Brian G Main ()
Andrew Park

Abstract

A common procedural arrangement that is thought to influence the pre-trial settlement of civil disputes in one which allows the defendant to make an offer to settle which if it is rejected by the plaintiff and not subsequently bettered by the judge's trial decision will affect the division of the legal costs between the two sides. Operating under Federal Rule 68 in the USA, as "offers to settle" or "payments into court" in England and Wales, and as "tenders" in Scotland, these devices are generally assumed to encourage settlement. This paper extends the theoretical model of Miller (1986) and Chung (1996a) to the British context, and presents some experimental evidence on how agents react to such arrangements. The rule seems to have little empirical impact on the propensity to settle and to favour the defendant in terms of the level of settlement.

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Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 29.

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Length: 30
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:edn:esedps:29

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Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-04-25 (All new papers)
NEP-EXP-2004-04-25 (Experimental Economics)
NEP-LAW-2004-04-25 (Law & Economics)

References listed on IDEAS
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Landes, William M, 1971. "An Economic Analysis of the Courts," Journal of Law & Economics, University of Chicago Press, vol. 14(1), pages 61-107, April.
Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," Journal of Business, University of Chicago Press, vol. 59(4), pages S251-78, October. [Downloadable!] (restricted)
Chung, Tai-Yeong, 1996. "Settlement of Litigation under Rule 68: An Economic Analysis," Journal of Legal Studies, University of Chicago Press, vol. 25(1), pages 261-86, January.
Anderson, David A, 1994. "Improving Settlement Devices: Rule 68 and Beyond," Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 225-46, January.

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