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Litigation and Settlement: An Empirical Approach

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  • Fournier, Gary M
  • Zuehlke, Thomas W

Abstract

Litigants in civil lawsuits involving monetary damages often find an out-of-court settlement preferable to a trial. Most theoretical models of settlement choice employ an expected-utility-maximizing framework that emphasizes the importance of risk preferences, litigation costs, and the distribution of trial awards. An empirical model of settlement choice is used to examine whether the variables prominent in the theoretical literature are statistically useful in explaining the occurrence and monetary value of settlements. Estimates from a sample of civil filings provide new empirical evidence of how the legal system affects the behavior of litigants during the settlement process. Copyright 1989 by MIT Press.

Suggested Citation

  • Fournier, Gary M & Zuehlke, Thomas W, 1989. "Litigation and Settlement: An Empirical Approach," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 189-195, May.
  • Handle: RePEc:tpr:restat:v:71:y:1989:i:2:p:189-95
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    1. repec:kap:revind:v:52:y:2018:i:1:d:10.1007_s11151-017-9572-1 is not listed on IDEAS
    2. Baptiste Massenot & Maria Maraki & Christian Thoeni, 2016. "Legal compliance and litigation spending under the English and American rule: Experimental evidence," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 16.19, Université de Lausanne, Faculté des HEC, DEEP.
    3. Davis S. Kaplan & Joyce Sadka & Jorge Luis Silva-Mendez, 2006. "Litigation and Settlement: New Evidence from Labor Courts in Mexico," Working Papers 0606, Centro de Investigacion Economica, ITAM.
    4. Daniel P. Kessler & Daniel L. Rubinfeld, 2004. "Empirical Study of the Civil Justice System," NBER Working Papers 10825, National Bureau of Economic Research, Inc.
    5. Peter Grajzl & Valentina Dimitrova-Grajzl & Katarina Zajc, 2016. "Inside post-socialist courts: the determinants of adjudicatory outcomes in Slovenian commercial disputes," European Journal of Law and Economics, Springer, vol. 41(1), pages 85-115, February.
    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. Luke Garrod & Bruce Lyons, 2016. "Early Settlement in European Merger Control," Journal of Industrial Economics, Wiley Blackwell, vol. 64(1), pages 27-63, March.
    8. Beckner, Clinton III & Katz, Avery, 1995. "The incentive effects of litigation fee shifting when legal standards are uncertain," International Review of Law and Economics, Elsevier, vol. 15(2), pages 205-224, June.
    9. Jean O. Lanjouw & Josh Lerner, 1996. "Preliminary Injunctive Relief: Theory and Evidence from Patent Litigation," NBER Working Papers 5689, National Bureau of Economic Research, Inc.
    10. Lanjouw, Jenny & Schankerman, Mark, 1998. "Patent Suits: Do They Distort Research Incentives?," CEPR Discussion Papers 2042, C.E.P.R. Discussion Papers.
    11. Jean O. Lanjouw & Mark Schankerman, 1997. "Stylized Facts of Patent Litigation: Value, Scope and Ownership," NBER Working Papers 6297, National Bureau of Economic Research, Inc.
    12. Holger Sieg, 2000. "Estimating a Bargaining Model with Asymmetric Information: Evidence from Medical Malpractice Disputes," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 1006-1021, October.
    13. Lanjouw, Jean O & Lerner, Josh, 2001. "Tilting the Table? The Use of Preliminary Injunctions," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 573-603, October.
    14. Joni Hersch, 2006. "Demand for a Jury Trial and the Selection of Cases for Trial," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 119-142, January.
    15. Schwab, Christian & Tang, Hin-Yue Benny, 2011. "Die Steuerungswirkungen unterschiedlicher Prozesskostenregelungen: Ein Überblick zum Stand von Theorie und Empirie
      [The economic effects of alternative fee shifting rules: A review of the theoretic
      ," MPRA Paper 32746, University Library of Munich, Germany.
    16. 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.
    17. Helmers, Christian & Lefouili, Yassine & Love, Brian & McDonagh, Luke, 2016. "The Effect of Fee Shifting on Litigation: Evidence from a Court Reform in the UK," TSE Working Papers 16-740, Toulouse School of Economics (TSE), revised Sep 2017.
    18. Lerner, Josh, 1995. "Patenting in the Shadow of Competitors," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 463-495, October.
    19. Michael Hellwig & Kai Hüschelrath & Ulrich Laitenberger, 2018. "Settlements and Appeals in the European Commission’s Cartel Cases: An Empirical Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(1), pages 55-84, February.

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