12 January ACLE Economics Seminars: Kathryn Spier

ACLE Economics Seminars
Kathryn Spier
Harvard Law School
Monday 12 January | 12:00 – 13:15 | M 3.02
Lunch will be provided at 11:45

Amsterdam Center for Law & Economics | Plantage Muidergracht 12 | 1018 TV Amsterdam
Tailored Suits: Contracting on Litigation*
A Plaintiff and defendant are negotiating in the shadow of pending litigation. When the divergence between their subjective beliefs, is sufficiently large, and they are not too risk averse, their litigants will forego settlement in favor of a contract that tailors the damage payments to suit their beliefs and preferences. With CARA expected utility, the optimal contract is increasing in the likelihood ratio of their subjective beliefs. When the litigants’ beliefs are normally distributed with divergent means, the optimal contract is linear in the court’s award and is flatter when the parties are more risk averse, when beliefs are more aligned, when the trial outcome variance is larger, and when litigation costs are endogenous. Implications for real world litigation practice include the use of high-low settlement agreements and partial settlement in multi-issue litigation. Finally, the role of third parties, including litigation funders and insurance companies is analyzed and discussed.

* with J.J. Prescott

Please send an e-mail to acle@uva.nl if you want to meet Kathryn Spier between the four half an hour slots between 13:15 and 15:15 we have available.
Next ACLE Economics Seminar
Monday 2 February | Piero Gottardi
European University Institute
Department of Economics
Economics Seminars Program 2014-2015

The Amsterdam Center for Law & Economics

(ACLE) is a joint initiative of the economics and law facul-ties of the University of Amsterdam. The objective of the ACLE is to promote high-quality research in the fields at the interface of law and economics. Located in the heart of Amsterdam’s old city, the ACLE presently associates around twenty scholars in law and economics, ranging from full professors to PhD students.

ACLE Website

ACLE working papers series

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