Abstract

http://ssrn.com/abstract=10525
 
 

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Psychology, Economics, and Settlement: A New Look at the Role of the Lawyer


Russell B. Korobkin


UCLA School of Law

Chris Guthrie


Vanderbilt University - Law School


Texas Law Review, Vol. 76, 1997
UCLA School of Law Research Paper

Abstract:     
Law and economics models of litigation settlement, based on the behavioral assumptions of rational choice theory, ignore the many psychological reasons that settlement negotiations can fail, yet they accurately predict that vast majority of lawsuits will settle short of formal adjudication. What explains this? We present experimental data that suggests lawyers might evaluate the settlement vs. adjudication decision from a perspective more closely akin to "rational choice theory" than will non-lawyers and, consequently, increase the observed level of settlement. We then evaluate whether the hypothesized difference between lawyers and non-lawyers is likely to lead to more efficient dispute resolution, concluding that lawyers are efficiency enhancing when differences between lawyers and non-lawyers can be attributed to "cognitive error" on the part of the latter but not when those differences are due to differences in preference structures and litigation goals. Finally, we suggest a framework that lawyers concerned with efficient dispute resolution should adhere to when counseling clients during settlement negotiations.

Number of Pages in PDF File: 33

JEL Classification: D74, K41

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Date posted: July 18, 1997  

Suggested Citation

Korobkin, Russell B. and Guthrie, Chris, Psychology, Economics, and Settlement: A New Look at the Role of the Lawyer. Texas Law Review, Vol. 76, 1997; UCLA School of Law Research Paper. Available at SSRN: http://ssrn.com/abstract=10525

Contact Information

Russell B. Korobkin (Contact Author)
UCLA School of Law ( email )
385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-825-1994 (Phone)
310-206-7010 (Fax)
Chris Guthrie
Vanderbilt University - Law School ( email )
131 21st Avenue South
Nashville, TN 37203-1181
United States
615-322-6823 (Phone)
615-322-6631 (Fax)
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