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...

We consider models of pretrial negotiations where both costly voluntary disclosure and costly mandatory discovery are possible. When the uninformed party makes the final offer (the screening game), mandatory discovery will be utilized, if it is not very costly, but voluntary disclosure will not...

Much of the law and economics literature, including Bebchuk (1984) and Reinganum and Wilde (1986), explains settlement failure in bargaining as a consequence of asymmetric information. An alternative, non-strategic explanation found in Shavell (1982) suggests that settlement failure stems from...

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 to conceal private information about the expected outcome in arbitration...

Arbitration is frequently utilized to settle disputes. Much research has focused on the properties of final-offer arbitration (FOA) relative to conventional arbitration. Both mechanisms should encourage settlement in standard environments, but previous empirical work finds that impasses remain...

We develop a model of pretrial bargaining under asymmetric information where both the plaintiff and the defendant’s cost of proceeding to trial is an increasing function of the judgment at trial. This contrasts with the standard assumption that costs at trial are a constant. As a result of...

We develop a model with asymmetric information, where the uninformed party makes the offer. When parties proceed to trial, their endogenous expenditures partially determine the outcome. The endogenous spending at trial can either strengthen or weaken the bargaining position of the uninformed...

We consider a model of litigation in which some defendants have insufficient assets to pay a judgment at trial. Because the defendant's assets are not observable, this serves as a source of asymmetric information which leads to trials in the equilibrium of the model. Unlike many other types of...