Pretrial Bargaining with Self-Serving Bias and Asymmetric Information

23 Pages Posted: 15 May 2000

See all articles by Amy Farmer

Amy Farmer

University of Arkansas - Department of Economics

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies

Multiple version iconThere are 2 versions of this paper

Date Written: Undated

Abstract

We introduce self-serving bias into the Bebchuk (1984) model in which trials result from asymmetric information and characterize the equilibrium. An increase in the self-serving bias of a defendant who receives an offer can, under some circumstances, reduce the incidence of trial. More typically, however, we find that an increase in the self-serving bias of either player increases the incidence of trial. An increase in the self-serving bias of a player who receives the offer has ambiguous effects on that player's welfare. Self-serving bias serves as a commitment mechanism not to accept offers which are too unfavorable, but players with such a bias typically end up in trial more often. For the player making the offer, we find that an increase in self-serving bias unambiguously lowers welfare.

JEL Classification: K4

Suggested Citation

Farmer, Amy and Pecorino, Paul, Pretrial Bargaining with Self-Serving Bias and Asymmetric Information (Undated). Available at SSRN: https://ssrn.com/abstract=223329 or http://dx.doi.org/10.2139/ssrn.223329

Amy Farmer (Contact Author)

University of Arkansas - Department of Economics ( email )

Fayetteville, AR 72701
United States
501-575-6093 (Phone)
501-575-3241 (Fax)

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-0379 (Phone)
205-348-0590 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
141
Abstract Views
1,412
rank
224,453
PlumX Metrics