The Economics of Collective Negotiation in Pretrial Bargaining

28 Pages Posted: 17 Dec 2002

Abstract

This article studies the strategic use of collective negotiation in multiplaintiff litigation. Compared with one-on-one negotiation, collective negotiation can change the distribution of per-plaintiff damages in a manner that influences the defendant's bargaining incentive. Informational asymmetry among the members of collective action and delegation of bargaining to a self-interested representative can yield a tougher bargaining position. A plaintiff's decision to join the collective action can signal his type, which in turn influences the defendant's bargaining behavior. In equilibrium, some plaintiffs join the action for fear of sending a bad signal.

Suggested Citation

Che, Yeon-Koo, The Economics of Collective Negotiation in Pretrial Bargaining. International Economic Review, Vol. 43, pp. 549-576, 2002. Available at SSRN: https://ssrn.com/abstract=312682

Yeon-Koo Che (Contact Author)

Columbia University ( email )

420 W. 118th Street, 1016IAB
New York, NY 10027
United States
212-854-8276 (Phone)

HOME PAGE: http://www.columbia.edu/~yc2271

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