Friedman, Daniel; Wittman, Donald - In: Journal of Law, Economics and Organization 23 (2007) 1, pp. 98-126
We construct game-theoretic foundations for bargaining in the shadow of a trial. Plaintiff and defendant both have noisy signals of a common-value trial judgment and make simultaneous offers to settle. If the offers cross, they settle on the average offer; otherwise, both litigants incur an...