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http://ssrn.com/abstract=952493
 
 

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Insurers, Illusions of Judgment & Litigation


Chris Guthrie


Vanderbilt University - Law School

Jeffrey J. Rachlinski


Cornell Law School


Vanderbilt Law Review, Forthcoming
Vanderbilt Law and Economics Research Paper No. 06-28

Abstract:     
Insurers play a critical role in the civil justice system. By providing liability insurance to parties who would otherwise be untenable as defendants, insurers make litigation possible. Once litigation materializes, insurers provide representation, pay legal fees, and often play a central role in resolving disputes through settlement or adjudication. In this paper, we explore empirically how these key litigation players make important decisions in the litigation process, like evaluating a case, deciding whether to settle, and if so, on what terms. We find that insurers, though not entirely immune to the effects of cognitive illusions that have been shown to distort litigation decision making, appear to make decisions in a more economically rational fashion than other litigation players. This finding, though preliminary, casts new light on litigation theory and practice.

Number of Pages in PDF File: 34

Keywords: litigation, settlement, heuristics and biases, experts, insurance, anchoring, framing, self-serving bias

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Date posted: December 21, 2006  

Suggested Citation

Guthrie, Chris and Rachlinski , Jeffrey J., Insurers, Illusions of Judgment & Litigation. Vanderbilt Law Review, Forthcoming; Vanderbilt Law and Economics Research Paper No. 06-28. Available at SSRN: http://ssrn.com/abstract=952493

Contact Information

Chris Guthrie (Contact Author)
Vanderbilt University - Law School ( email )
131 21st Avenue South
Nashville, TN 37203-1181
United States
615-322-6823 (Phone)
615-322-6631 (Fax)
Jeffrey John Rachlinski
Cornell Law School ( email )
524 College Ave
Myron Taylor Hall
Ithaca, NY 14853
United States
607-255-5878 (Phone)
607-255-7193 (Fax)
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