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The impact of defendant offers into court on negotiation in the shadow of the law: experimental evidence

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Original languageEnglish
Pages (from-to)177-192
Number of pages16
JournalInternational Review of Law and Economics
Volume22
Issue number2
Publication statusPublished - Aug 2002

Abstract

A common procedural arrangement that is thought to influence the pre-trial settlement of civil disputes is one which allows the defendant to make an offer to settle which, if it is rejected by the plaintiff and not subsequently bettered by the judge's trial decision, will affect the division of the legal costs between the two sides. Operating under Federal Rule 68 in the U.S.A., as "offers to settle" or "payments into court" in England and Wales, and as "tenders" in Scotland, these devices are generally assumed to encourage settlement. This paper extends the theoretical model of Miller [Journal of Legal Studies XV (1986) 93] and Chung [Journal of Legal Studies XXV (1996) 261] to the English rule context, and presents some experimental evidence on how agents react to such arrangements. The rule seems to have little empirical impact on the propensity to settle, but it does favour the defendant in terms of the level of settlement. (C) 2002 Elsevier Science Inc. All rights reserved.

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