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The Economics of Collective Negotiation in Pretrial Bargaining

  • Yeon-Koo Che

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

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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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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