Who Wins in Settlement Negotiations?
Russell B. Korobkin
University of California, Los Angeles (UCLA) - School of Law
American Law and Economics Review, Vol. 11, No. 1, pp. 162-208, 2009
When lawsuits are resolved out of court, what determines the settlement price? This article uses a laboratory simulation and path analysis to estimate the relative importance of measurable variables in determining who wins the battle for the cooperative surplus. In the simulated negotiation conditions, seven variables explained more than half of the variation in settlement outcomes achieved by participants, with negotiators’ predictions of their opponent's reservation prices the most important, followed by negotiator gender and amount of first offer. Although the specific context of this article is settlement, the insights generated are applicable to any two-party, distributive negotiation.
JEL Classification: C78, C92, D03, D74, D86, K12, K41Accepted Paper Series
Date posted: August 25, 2009
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