@techreport{b6c48abc9b474c3b848b3213082fe848,
title = "Litigation and Settlement under Loss Aversion",
abstract = "In this paper, we investigate how loss aversion affects people's behavior in civil litigation. We find that a loss-averse plaintiff demands a higher offer for small claims to maintain her threat to proceed to trial compared to a loss- neutral plaintiff. For larger claims, a loss-averse plaintiff demands a lower offer to increase the settlement probability as loss pains her extra in trial. We also investigate how various policies affect loss-averse litigants' settlement decisions. Only a reduction in the asymmetry of information about trial odds uniformly leads to higher settlement rates.",
keywords = "settlement, loss aversion, Asymmetric Information",
author = "Cedric Argenton and Xiaoyu Wang",
note = "CentER Discussion Paper Nr. 2020-008",
year = "2020",
month = mar,
day = "24",
language = "English",
volume = "2020-008",
series = "CentER Discussion Paper",
publisher = "CentER, Center for Economic Research",
type = "WorkingPaper",
institution = "CentER, Center for Economic Research",
}