Who Wins in Settlement Negotiations?

Posted: 25 Aug 2009

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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, K41

Suggested Citation

Korobkin, Russell B., Who Wins in Settlement Negotiations?. American Law and Economics Review, Vol. 11, No. 1, pp. 162-208, 2009, Available at SSRN: https://ssrn.com/abstract=1458794 or http://dx.doi.org/ahp004

Russell B. Korobkin (Contact Author)

UCLA School of Law ( email )

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