Judicial Valuation Behavior: Some Evidence from Bankruptcy
15 Pages Posted: 31 Aug 2005
This Article presents an empirical study of judicial valuation in the bankruptcy context, focusing on twenty-four valuation disputes in which a bankruptcy judge reached a valuation outcome between the values contended for by the parties. Two main findings emerged from the cases studied: (1) bankruptcy judges on average allocated 65.2% of the value in controversy to debtors and 34.8% to secured creditors; and (2) bankruptcy judges were more than three times as likely to allocate most of the value in controversy to debtors as they were to secured creditors. These results lend empirical support to the behaviorist intuition that loss aversion bias informs judicial decisionmaking and may have further implications for substantively neutral reform of the processes whereby valuation disputes are resolved.
Keywords: bankruptcy, valuation, behavioral, empirical, law, economics
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