Exploiting Plaintiffs Through Settlement: Divide and Conquer

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Exploiting Plaintiffs Through Settlement: Divide and Conquer

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Title: Exploiting Plaintiffs Through Settlement: Divide and Conquer
Author: Che, Yeon-Koo; Spier, Kathryn E.

Note: Order does not necessarily reflect citation order of authors.

Citation: Yeon-Koo Che & Kathryn E. Spier, Exploiting Plaintiffs Through Settlement: Divide and Conquer, 164 J. Inst. & Theoretical Econ. 4 (2008).
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Abstract: This paper considers settlement negotiations between a single defendant and N plaintiffs when there are Fixed costs of litigation. When making simultaneous take-it-or-leave-it offers to the plaintiffs, the defendant adopts a divide and conquer strategy. Plaintiffs settle their claims for less than they are jointly worth. The problem is worse when N is larger, the offers are sequential, and the plaintiffs make offers instead. Although divide and conquer strategies dilute the defendant's incentives, they increase the settlement rate and reduce litigation spending. Plaintiffs can raise their joint payoff through transfer payments, voting rules, and covenants not to accept discriminatory offers.
Other Sources: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1009360
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:12019026
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