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...

Prostitution is a multi-billion dollar, globally distributed, low-concentration service industry that is receiving increasing attention in the economics literature. This article focuses on a widespread, but little studied, feature of this environment—the role of intermediaries (pimps or...

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...

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...

Two standard results in the litigation literature are that an informed party will not make a costly voluntary disclosure in a screening game and that the uninformed party will not engage in costly discovery in the signaling game. Both of these results rely on the assumption that the party making...

We develop screening models of final offer arbitration (FOA) in which the uninformed party makes a demand to the informed party. We consider models in which settlement occurs before and after the submission of binding offers, and in each we analyze costly discovery. Our results are compared to...

We extend the signaling model of Reinganum and Wilde (1986) by allowing for the possibility of negative expected value (NEV) suits. If filing costs are positive, then there exists a separating equilibrium such that plaintiffs with NEV suits choose not to file. By making the filing decision...

We identify two features of final offer arbitration (FOA) which may impede settlement in a bargaining game where asymmetric information drives the failure to settle. First, under FOA the informed party has an incentive not to voluntarily reveal private information. Revealing this information...

Asymmetric information on preferences is a potentially important explanation of bargaining failure. Preferences are not directly observable and information about preferences may be difficult to credibly establish to a bargaining partner. Unobserved preferences which may be relevant for pretrial...