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Asymmetric information, self-serving bias and the pretrial negotiation impasse

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  • Eric Langlais

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

There is evidence that asymmetric information does exist between litigants: not in a way supporting Bebchuk (1984)'s assumption that defendants' degree of fault is private information, but more likely as a result of parties' predictive capacity about the outcome at trial (Osborne, 1999). In this paper, we investigate the incidence of one component of this asymmetric predictive power, which has been examplified in experimental economics. We assume that litigants assess their priors on the plaintiff's prevailing rate at trial in a way consistent with the self-serving bias, which is the source of the asymmetric information. We compare the predictions of this model regarding the influence of individual priors with those in the literature. Finally, we analyse the influence of another reason for probability distorsion, i.e. risk aversion in the sense of Yaari (1987).

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  • Eric Langlais, 2008. "Asymmetric information, self-serving bias and the pretrial negotiation impasse," Working Papers hal-04140725, HAL.
    • Handle: RePEc:hal:wpaper:hal-04140725
    Note: View the original document on HAL open archive server: https://hal.science/hal-04140725
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    References listed on IDEAS

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