Jackpot Justice: The Value of Inefficient Litigation

Litigation seems to be a Pareto-ineffcient outcome of pretrial bargaining; however, this paper shows that litigation can be the outcome of rational behavior by a litigant and her attorney. If the attorney has more information than his client concerning the characteristics of the lawsuit, the client can use litigation as a way of extracting information. I show that, counterintuitively, litigation will occur only when the plaintiff is pessimistic about her prospects at trial. Even if the plaintiff could obtain a higher payoff from bargaining than from litigation-without-bargaining, bargaining may not occur in equilibrium. The plaintiff is more likely to sue if she is more pessimistic about winning damage in court and if litigation is more risky. Litigation is less likely to occur if the plaintiff receives third party financing for litigation

Bargaining in the shadow of a trial : adding notions of fairness to interest-based negotiation in legal domains

Most negotiation support systems have focused upon the notion of meeting the disputants’ interests. However in the legal domain, Alternative Dispute Resolution often occurs in the shadow of the law. Integrative bargaining neglects the vital issues of justice and power. In this article we address the issue of how to add notions of fairness to interests, through the development of the Family_Mediator system. Family_Mediator is an extension of the Family_Winner system, which advises mediators about potential trade-offs and compensation strategies for divorcing couples

Bargaining and Collusion in a Regulatory Model

Within a standard three-tier regulatory model, a benevolent prin- cipal delegates to a regulatory agency two tasks: the supervision of the …rms (two-type) costs and the arrangement of a pricing mecha- nism. The agency may have an incentive to manipulate information to the principal to share the gains of collusion with the …rm. The novelty of this paper is that both the regulatory mechanism and the side contracting between the agency and the …rm are modelled as a bargaining process. While as usual the ine¢ cient …rm does not have any interest in cost manipulation, we …nd that the e¢ cient …rm has an incentive to collude only if the agencys bargaining power is high enough, and the total gains of collusion are now lower than those the two partners would appropriate if the agency could make a take-it-or- leave-it o¤er. Then, we focus on the optimal institutional responses to the possibility of collusion. In our setting, where the incomplete- ness of contracts prevents the principal from designing of a screening mechanism and thus Tiroles equivalence principle does not apply, we show how the playersbargaining powers crucially drive the optimal response to collusion.bargaining, collusion, regulation

Ethical Bedrock Under a Changing Negotiation Landscape

Editors\u27 Note: Your dilemmas as a negotiator fall into two basic sets, “what’s possible?” and “what\u27s right?” The first is treated by many chapters in this book. Here, from his philosopher\u27s background, Gibson writes about the influence of morality on negotiations, and how we can think more clearly about what\u27s the right thing to do. This chapter should be read in conjunction with Carrie-Meadow’s chapter on The Morality of Compromise

Bargaining and Collusion in a Regulatory Model

We consider the regulation of a monopolistic market when the prin- cipal delegates to a regulatory agency two tasks: the supervision of the firm's unknown costs and the arrangement of a pricing mechanism. As usual, the agency may have an incentive to hide information from the principal to share the informative rent with the firm. The novelty of this paper is that both the regulatory mechanism and the side con- tracting between the agency and the firm are modelled as a bargaining process. This negotiation between the regulator and the monopoly induces a radical change in the extraprofit from private information, which is now equal to the standard informational rent weighted by the agency’ bargaining power. This in turn a¤ects the collusive stage, in particular the firm has the greatest incentive to collude when fac- ing an agency with the same bargaining power. Then, we focus on the optimal organizational responses to the possibility of collusion. In our setting, where incompleteness of contracts prevents the design of a screening mechanism between the agency’ types and thus Tirole’ equivalence principle does not apply, we prove that the stronger the agency in the negotiation process, the greater the incentives for the principal to tolerate collusion in equilibrium.regulation, bargaining, collusion.

The Innocence Effect

Nearly all felony convictions—about 95 percent—follow guilty pleas, suggesting that plea offers are very attractive to defendants compared to trials. Some scholars argue that plea bargains are too attractive and should be curtailed because they facilitate the wrongful conviction of innocents. Others contend that plea bargains only benefit innocent defendants, providing an alternative to the risk of a harsher sentence at trial. Hence, even while heatedly disputing their desirability, both camps in the debate believe that plea bargains commonly lead innocents to plead guilty. This Article shows, however, that the belief that innocents routinely plead guilty is overstated. We provide varied empirical evidence for the hitherto neglected innocence effect, revealing that innocents are significantly less likely to accept plea offers that appear attractive to similarly situated guilty defendants. The Article further explores the psychological causes of the innocence effect and examines its implications for plea bargaining. Positively, we identify the striking cost of innocence, wherein innocents suffer harsher average sanctions than similarly situated guilty defendants. Yet our findings also show that the innocence effect directly causes an overrepresentation of the guilty among plea bargainers and an overrepresentation of the innocent among those who choose trial. In this way, the innocence effect beneficially reduces the rate of wrongful convictions—including accepted plea bargains—even when compared to a system that does not allow plea bargaining. Normatively, our analysis finds that both detractors and supporters of plea bargaining should reevaluate, if not completely reverse, their long-held positions to account for the causes and consequences of the innocence effect. The Article concludes by outlining two proposals for minimizing false convictions, better protecting the innocent, and improving the plea bargaining process altogether by accounting for the innocence effect

Property rights and land use regulation: a comparative evaluation

This paper reviews the rationale for policies aimed at limiting the conversion of farmland to nonfarm uses from the perspective of the economic theory of property rights. Policy measures to restrict the conversion of agricultural land to non-farm uses are commonplace in many countries. Typically, these policies are introduced to address long-run food security issues and possible externalities associated with incompatibility in land uses. The paper argues that the presence of externalities in the land market does not warrant farmland protection policies. Farmland protection policies in themselves can be a source of policy failure. It concludes that well-defined property rights along with nuisance and trespass laws, are necessary and sufficient for efficient allocation of land and can be a better alternative to farmland protection policies.Land Economics/Use,

Supply response of West African agricultural households

This paper explores the implications of preference heterogeneity between wives and husbands in nonresource-pooling rural West African households for the effect of crop price changes on agricultural production, i.e., their supply response. A "semi-cooperative" game-theoretic model of household decisionmaking, in which household members make unilateral time and income allocation decisions and negotiate over who controls these resources, is proposed. The model is used to show that Pareto efficiency in both production and consumption do not hold. It is then employed to simulate the supply response to cotton price increases accompanying agricultural sector liberalization in Burkina Faso in the early 1980s. The simulated semi-cooperative model predicts the cotton supply response of (monogamous) Burkinabé households to be 25 percent below that which would ensue in households facing the same production constraints yet whose members have identical preferences. The analysis indicates that in nonresource-pooling agricultural households, preference heterogeneity can be expected to mute supply response and may do so in a quantitatively significant manner. It illustrates how an intrahousehold approach that allows for such heterogeneity and for disaggregation of resource control by gender contributes to a better understanding of price effects.Gender ,Resource management. ,Households Decision making. ,Household resource allocation ,