Download This PaperPretrial Signaling with Negative Expected Value Suits
U of Alabama, Economics, Finance and Legal Studies Working Paper No. 02-07-01
24 Pages Posted: 23 Jul 2002
Date Written: July 2002
Abstract
We extend the signaling model of Reinganum and Wilde (1986) by allowing for the possibility of negative expected value (NEV) suits. If filing costs are positive, then there exists a separating equilibrium such that plaintiffs with NEV suits choose not to file. By making the filing decision endogenous, we are able to derive new insights on the effects of fee shifting and contingency fees in the signaling model.
Keywords: Signaling, Pretrial Settlement, Negative Expected Value Suits
JEL Classification: K4, D8
Suggested Citation: Suggested Citation
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