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Discovery and Disclosure with Asymmetric Information and Endogenous Expenditure at Trial

Listed author(s):
  • Amy Farmer
  • Paul Pecorino

We develop a model with asymmetric information, in which the uninformed party makes the offer. When the parties proceed to trial, their endogenous expenditures partially determine the outcome. The endogenous spending at trial can either strengthen or weaken the bargaining position of the uninformed party with the player types who settle. When the bargaining position is strengthened, some standard results on information transmission prior to trial may be overturned. The recipient of the offer with a weak case may make a costly voluntary disclosure. In addition, the party making the offer may refuse costless discovery. Both of these results contrast with the standard results in the literature derived from models in which spending at trial is treated as exogenous.

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File URL: http://dx.doi.org/10.1086/667932
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/667932
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 Legal Studies.

Volume (Year): 42 (2013)
Issue (Month): 1 ()
Pages: 223-247

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Handle: RePEc:ucp:jlstud:doi:10.1086/667932
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLS/

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