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http://hdl.handle.net/10419/56834
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| Title: | | Gambling for the upper hand: Settlement negotiations in the lab  |
| Authors: | | Miettinen, Topi Ropponen, Olli Sääskilahti, Pekka |
| Issue Date: | | 2011 |
| Series/Report no.: | | Jena economic research papers 2011,022 |
| Abstract: | | We exploit a controlled frameless laboratory experiment to study settlement negotiations and the plaintiff's decision to raise a lawsuit in case of an impasse. We find that greater variance in court outcomes increases the litigation rate and lowers the settlement rate. This latter finding goes against the received wisdom and earlier experimental evidence (Ashenfelter et al. 1992) that greater risk in arbitration outcomes increases the settlement rate. We find that self-serving biases about the protagonist' course of action are accountable for the lower settlement rate, while an impasse payoff inferior to that of the defendant induces the plaintiffs to excessive risk-taking in an attempt to narrow the gap. |
| Subjects: | | bargaining litigation loss-aversion self-serving bias settlement |
| JEL: | | C72 C9 K41 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Jena Economic Research Papers, MPI für Ökonomik
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