Sharing of Information Prior to Settlement or Litigation
Volume: Volume 20, No. 2
Issue: Summer 1989
Pages: pp. 183-195
Authors: Steven Shavell
Title: Sharing of Information Prior to Settlement or Litigation
Abstract: In this article the voluntary sharing of information prior to settlement negotiations is studied in a model where one type of litigant -- plaintiffs, to be exact -- possesses private information. In equilibrium, plaintiffs whose expected judgments would exceed a certain threshold will reveal their information (if they can credibly establish it) and settle for higher amounts than if they were silent; plaintiffs with lower expected judgments will remain silent and settle. The effect of the legal right of "discovery" is also examined.
JEL Classification
Economics of Law and Crime (9160)
Theory of Uncertainty and Information (0261)