We show that sender honesty can hurt receivers in simple signaling games. The receiver faces a trade-off between its ability to work with senders and the quality of information it can get and use from them. Our example also contradicts recent work suggesting that returns to honesty should be...

Asymmetric information is a leading explanation for settlement failure that results in a costly trial. Typically, the information in question is assumed to have bilateral payoff relevance, meaning it affects the expected payoffs of both the plaintiff and defendant. When there is bilateral payoff...

We extend the 1986 signaling model of Reinganum and Wilde by allowing for the possibility of negative expected value (NEV) suits. If filing costs are zero, the equilibrium consistent with the D1 refinement implies that settlement offers face a rejection rate of 100%. If filing costs are...

Richard Epstein has argued that governments should pay compensation for regulatory actions that impose costs on a subset of society. I develop a model in which there are two groups, one of whom benefits from a regulation, and one of whom bears the costs. A potentially biased government sets the...

It is commonly believed that a monetary policy that targets the price level reduces the long-term variability of the price level, but only at the cost of increased variability of both inflation and output. We develop a model in which the one-step-ahead variance of output and the price level are...

We analyze contingency fees in the Reinganum and Wilde (1986) signaling model of litigation. The effect of contingency fees on settlement depends on the details of the contingency fee contract and the nature of the informational asymmetry assumed in the model. Introducing bifurcated fee...