Maybe There's No Bias in the Selection of Disputes for Litigation

29 Pages Posted: 29 Jun 2017 Last revised: 19 Sep 2017

See all articles by Eric Helland

Eric Helland

Claremont McKenna College - Robert Day School of Economics and Finance; RAND

Daniel M. Klerman

University of Southern California Gould School of Law

Yoon-Ho Alex Lee

Northwestern Pritzker School of Law

Date Written: September 19, 2017

Abstract

New York “closing statement” data provide unique insight into settlement and selection. The distributions of settlements and adjudicated damages are remarkably similar, and the average settlement is very close to the average judgment. One interpretation is that selection effects may be small or non-existent. Because existing litigation models all predict selection bias, we develop a simple, no-selection-bias model that is consistent with the data. Nevertheless, we show that the data can also be explained by generalized versions of screening, signaling, and Priest-Klein models.

Keywords: Litigation; Settlement; Selection; Priest-Klein; Asymmetric Information; Inconsistent Priors

JEL Classification: K41

Suggested Citation

Helland, Eric A. and Klerman, Daniel M. and Lee, Yoon-Ho Alex, Maybe There's No Bias in the Selection of Disputes for Litigation (September 19, 2017). Forthcoming, Journal of Institutional and Theoretical Economics; Claremont McKenna College Robert Day School of Economics and Finance Research Paper No. 2994624; USC CLASS Research Papers Series No. CLASS17-18; USC Legal Studies Research Papers Series No. 17-16. Available at SSRN: https://ssrn.com/abstract=2994624 or http://dx.doi.org/10.2139/ssrn.2994624

Eric A. Helland

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-7275 (Phone)
909-621-8243 (Fax)

RAND ( email )

1776 Main Street
Santa Monica, CA
United States

Daniel M. Klerman (Contact Author)

University of Southern California Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-7973 (Phone)
213-740-5502 (Fax)

HOME PAGE: http://weblaw.usc.edu/contact/contactInfo.cfm?detailID=227

Yoon-Ho Alex Lee

Northwestern Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
(312) 503-2565 (Phone)

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