Information and Bargaining Through Agents: Experimental Evidence from Mexico's Labor Courts

88 Pages Posted: 22 Oct 2018 Last revised: 2 Nov 2020

See all articles by Joyce Sadka

Joyce Sadka

Instituto Tecnológico Autónomo de México (ITAM)

Enrique Seira

Instituto Tecnológico Autónomo de México (ITAM)

Christopher Woodruff

University of Oxford - Wolfson College

Multiple version iconThere are 2 versions of this paper

Date Written: October 2018

Abstract

Well-functioning courts are essential for the health of both financial and real economies. Courts function poorly in most lower-income countries, but the root causes of poor performance are not well understood. We use a field experiment with ongoing cases to analyze sources of dysfunction in Mexico's largest labor court. Providing the parties with personalized outcome predictions doubles settlement rates and reduces average case duration, but only when the worker is present to receive the information. An intervention before plaintiffs contact a lawyer increases pre-suit settlement. The experiment illuminates agency issues among plaintiffs with private lawyers. For most workers, the treatment appears to improve welfare, as measured by discounted payouts and ability to pay bills.

Keywords: Labor courts, overconfidence, Settlement, statistical information

JEL Classification: J52, J83, K31, K41, K42

Suggested Citation

Sadka, Joyce and Seira, Enrique and Woodruff, Christopher, Information and Bargaining Through Agents: Experimental Evidence from Mexico's Labor Courts (October 2018). CEPR Discussion Paper No. DP13261, Available at SSRN: https://ssrn.com/abstract=3270940

Joyce Sadka (Contact Author)

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Av. Camino a Santa Teresa #930
Col. Heroes de Padierna
Mexico City, D.F. 10370
Mexico

Enrique Seira

Instituto Tecnológico Autónomo de México (ITAM) ( email )

Av. Camino a Sta. Teresa 930
Col. Héroes de Padierna
Mexico City, D.F. 01000, Federal District 01080
Mexico

Christopher Woodruff

University of Oxford - Wolfson College ( email )

United Kingdom

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