The British American Rules: An experimental examination of pre-trial bargaining within the shadow of the law
AbstractA commonly held view is that the frequency and value of pre-trial settlements in civil disputes are greatly influenced by the cost allocation regime that is in place if the case goes to trial. There is a large and growing theoretical literature on this subject but almost no empirical evidence. This is due simply to the scarcity of relevant data owing to the confidentiality generally associated with such matters. However, the area is an ideal one to analyse experimentally. In this paper we consider the effect of the British and American rules for cost allocation using such an experimental methodology. We find that the two rules produce no difference in the frequency of pre-trial settlements but that the British rule produces higher settlements (pro-pursuer) if the probability of the pursuer winning is large.
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Bibliographic InfoPaper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 30.
Date of creation: Apr 2004
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-02 (All new papers)
- NEP-EXP-2004-06-02 (Experimental Economics)
- NEP-LAW-2004-06-02 (Law & Economics)
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