Hush Money
Volume: Volume 30, No. 4
Issue: Winter 1999
Pages: pp. 661-678
Authors: Andrew F. Daughety and Jennifer F. Reinganum
Title: Hush Money
Abstract: We provide a simple incomplete-information model wherein an initially uninformed plaintiff makes a menu of settlement demands (one of which involves confidentiality) of the informed defendant. The defendant is informed about both his culpability in the harm suffered by the current plaintiff and the existence of other plaintiffs. The possibility that there are other plaintiffs the defendant might face improves the current plaintiff's bargaining position, as the likelihood of follow-on suits depends upon the visibility of the outcome of the case. For this reason, the defendant may be willing to be "hush money."
JEL Classification
Legal Procedure, the Legal System, and Illegal Behavior: General (K400)
Bargaining Theory; Matching Theory (C780)
Bargaining