Antitrust Settlements and Trial Outcomes
Risk aversion plays an important role in explaining why antitrust cases settle instead of going to trial. Using a jointly estimated model of settlement and trial outcome, the authors find that a one percent increase in the probability that the plaintiff wins at trial raises the probability of a settlement by 0.13 percent. They also find that reputation effects are not a significant factor for defendants, so the risk aversion of the defendants does not play a dominant role in determining whether the parties settle. Plaintiffs are more likely to win in certain jurisdictions, which encourages venue shopping by plaintiffs. Copyright 1996 by MIT Press.
Volume (Year): 78 (1996)
Issue (Month): 3 (August)
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