Effort, Information, Settlement, Trial
Given the costs of litigation and the availability of pretrial discovery, the question arises why some cases fail to settle at any time in the pretrial period. To examine this problem, the article develops a model of litigation and settlement in which the efforts the parties invest in the case (1) partly determine the strength of the plaintiff's claim and (2) are partly shielded from disclosure. The parties pursue mixed strategies in equilibrium, preventing settlement in a positive fraction of cases. Copyright 1995 by the University of Chicago.
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