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Signaling, Learning and Screening Prior to Trial: Informational Implications of Preliminary Injunctions

Author

Listed:
  • Thomas D. Jeitschko

    (Economic Analysis Group, Antitrust Division, U.S. Department of Justice)

  • Byung-Cheol Kim

Abstract

The decision to request a preliminary injunction—a court order that bans a party from certain actions until their lawfulness are ascertained in a final court ruling at trial—is an important litigation instrument in many areas of the law including antitrust, copyright, patents, trademarks, employment and labor relations as well as contracts. The process of filing for a preliminary injunction and the court's ruling on such a request generates information that can affect possible settlement decisions. We consider these implications when there is uncertainty about both the plaintiff's damages as well as the merits of case in the eyes of the court. Both plaintiff and defendant revise their beliefs about the case strength in dispute once they observe the court's ruling on preliminary injunctive relief. We study how such learning affects the likelihood of settlement. A precursor to this analysis is the study of the strategic role of preliminary injunctions as a means to signal the plaintiff's willingness to settle.

Suggested Citation

  • Thomas D. Jeitschko & Byung-Cheol Kim, 2011. "Signaling, Learning and Screening Prior to Trial: Informational Implications of Preliminary Injunctions," EAG Discussions Papers 201102, Department of Justice, Antitrust Division.
  • Handle: RePEc:doj:eagpap:201102
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    File URL: https://www.justice.gov/atr/public/eag/267542a.html
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    Cited by:

    1. Andrew F. Daughety & Reinganum F. Reinganum, 2014. "Settlement and Trial: Selected Analyses of the Bargaining Environment," Vanderbilt University Department of Economics Working Papers 14-00005, Vanderbilt University Department of Economics.

    More about this item

    Keywords

    preliminary injunction; learning; signaling; screening; litigation; pre-trial motion; settlement;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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