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Institutional Causes of Delay in the Settlement of Legal Disputes

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  • Kessler, Daniel

Abstract

Social costs created by delay in the resolution of legal disputes have motivated an extensive theoretical literature studying the causes of delay. However, much less work has investigated a related, more policy-relevant question: how do legal institutions empirically affect delay in settlement? Based on analysis of the timing of settlement of automobile bodily injury insurance claims, I present two major findings on this topic. First, delay in trial courts increases delay in settlement. Second, state tort laws designed to reduce delay in settlement do not work as intended. Reforms imposing prejudgment interest, which were designed to reduce delay, actually increase delay in settlement, controlling for other state-level institutional factors and the characteristics of claims. Copyright 1996 by Oxford University Press.

Suggested Citation

  • Kessler, Daniel, 1996. "Institutional Causes of Delay in the Settlement of Legal Disputes," Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(2), pages 432-460, October.
  • Handle: RePEc:oup:jleorg:v:12:y:1996:i:2:p:432-60
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    References listed on IDEAS

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    1. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
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    Citations

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    Cited by:

    1. Friehe Tim & Miceli Thomas J., 2017. "A Note on Trial Delay and Social Welfare: The Impact of Multiple Equilibria," Review of Law & Economics, De Gruyter, vol. 13(1), pages 1-15, March.
    2. Kessler, Daniel P. & McClellan, Mark B., 2002. "How liability law affects medical productivity," Journal of Health Economics, Elsevier, vol. 21(6), pages 931-955, November.
    3. Daniel P. Kessler & Daniel L. Rubinfeld, 2004. "Empirical Study of the Civil Justice System," NBER Working Papers 10825, National Bureau of Economic Research, Inc.
    4. Paul Heaton & Eric Helland, 2011. "Judicial Expenditures and Litigation Access: Evidence from Auto Injuries," The Journal of Legal Studies, University of Chicago Press, vol. 40(2), pages 295-332.
    5. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2017. "Understanding the Time to Court Case Resolution: A Competing Risks Analysis Using Belgian Data," CESifo Working Paper Series 6450, CESifo Group Munich.
    6. Sean P. Sullivan, 2016. "Why Wait to Settle? An Experimental Test of the Asymmetric-Information Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 59(3), pages 497-525.
    7. Thomas J. Miceli, 2008. "An Equilibrium Model of Lawmaking," Working papers 2008-16, University of Connecticut, Department of Economics.
    8. Howard F. Chang & Hilary Sigman, 1999. "Incentives to Settle Under Joint and Several Liability," NBER Working Papers 7096, National Bureau of Economic Research, Inc.
    9. Sloan, Frank A. & Shadle, John H., 2009. "Is there empirical evidence for "Defensive Medicine"? A reassessment," Journal of Health Economics, Elsevier, vol. 28(2), pages 481-491, March.
    10. Daniel P. Kessler & Mark B. McClellan, 2000. "How Liability Law Affects Medical Productivity," NBER Working Papers 7533, National Bureau of Economic Research, Inc.
    11. Avraham, Ronen & Bustos, Álvaro, 2010. "The unexpected effects of caps on non-economic damages," International Review of Law and Economics, Elsevier, vol. 30(4), pages 291-305, December.
    12. Morgan Westéus, 2014. "Settlement probability asymmetries in the Swedish Labour Court," European Journal of Law and Economics, Springer, vol. 38(3), pages 485-512, December.
    13. Zhou, J., 2010. "Access to justice : An economic approach," Other publications TiSEM 9d70f451-35c4-4878-92bf-7, Tilburg University, School of Economics and Management.
    14. repec:kap:ejlwec:v:44:y:2017:i:2:d:10.1007_s10657-016-9540-5 is not listed on IDEAS
    15. Mallick, Indrajit, 2012. "The Socially Optimal Policy Choices by the Supreme Court – A Strategic Analysis," MPRA Paper 45042, University Library of Munich, Germany, revised 14 Mar 2013.
    16. Miceli, Thomas J., 1999. "Settlement delay as a sorting device," International Review of Law and Economics, Elsevier, vol. 19(2), pages 265-274, June.
    17. Berlemann, Michael & Christmann, Robin, 2017. "The Role of Precedents on Court Delay - Evidence from a civil law country," MPRA Paper 80057, University Library of Munich, Germany.
    18. Peter Grajzl & Katarina Zajc, 2017. "Litigation and the timing of settlement: evidence from commercial disputes," European Journal of Law and Economics, Springer, vol. 44(2), pages 287-319, October.
    19. Eric Helland & Jonathan Klick & Alexander Tabarrok, 2005. "Data Watch: Tort-uring the Data," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 207-220, Spring.
    20. repec:eee:irlaec:v:52:y:2017:i:c:p:97-110 is not listed on IDEAS
    21. Samantha Bielen & Wim Marneffe & Lode Vereeck, 2015. "A cross-country analysis of the impact of regulatory quality on commercial case disposition time," European Journal of Law and Economics, Springer, vol. 39(3), pages 455-474, June.

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