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Why Wait to Settle? An Experimental Test of the Asymmetric-Information Hypothesis

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  • Sean P. Sullivan
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    The US legal system encourages civil litigants to quickly settle their disputes, yet lengthy and expensive delays often precede private settlements. The causes of these delays are uncertain. This paper describes an economic experiment designed to test one popular hypothesis: that asymmetric information might be a contributing cause of observed settlement delays. Experimental results provide strong evidence that asymmetric information can delay settlements, increasing average time to settlement by as much as 90 percent in some treatments. This causal relationship is robustly observed across different bargaining environments. On the other hand, results do not obviously confirm all aspects of the game-theoretic explanation for this relationship and suggest that asymmetric information may be only one of several contributing causes of settlement delay.

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    File URL: http://dx.doi.org/10.1086/689704
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    File URL: http://dx.doi.org/10.1086/689704
    Download Restriction: Access to the online full text or PDF requires a subscription.

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    Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

    Volume (Year): 59 (2016)
    Issue (Month): 3 ()
    Pages: 497-525

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    Handle: RePEc:ucp:jlawec:doi:10.1086/689704
    Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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