Court Costs and Pretrial Agreement Costs Sample Clauses

Court Costs and Pretrial Agreement Costs. We start by taking it as given that a suit has in fact been filed. We also abstract from the possibility that P could drop the suit after filing it, which instead will be considered at every stage of the timeline below. All parties are risk-neutral. Pay cDA Not Pay cDA Pay cPA S − cPA, −S − cAD I − cAP − cPT , −I − cTD Not Pay cPA I − cPT , −I − cAD − cTP I − cPT , −I − cDT At this stage it is useful to summarize our notation and write down the payoffs to the players as a consequence of the pretrial costs being paid or not, and the suit being litigated in Court or settled beforehand.9 (1) The first assumption we make stipulates that a pretrial agreement is efficient. In partic- ular, both parties are potentially better off by avoiding a costly trial. Assumption 1. Efficiency of Pre-Trial Agreements: The total cost of a pre-trial agreement is lower than the total cost of going to Court. In other words cT > cA. positive surplus cT − cA. Notice however that after the costs ci are sunk, the only relevant cost during the negotiation is cT , the total amount the parties can save by not going to Court. The settlement negotiated in the pre-trial agreement S is then the outcome of Generalized Xxxx bargaining between P and D over a surplus of size cT . We return to the details of the bargaining in Subsection 3.3 below. Before we proceed further, it is important to emphasize again that the pretrial agreement costs in our set up are ex-ante costs, exactly as in Anderlini and Xxxxx (2006). The key feature 9Notice that although (1) is reminiscent of a normal form game, it is not one since the choices are taken sequentially in a way to be specified below. of these costs is that they are sunk by the time the settlement negotiation begins and as such they are not the subject of negotiation. Notice however that these costs are critical in each party’s decision whether to participate in the pretrial negotiation or to go to Court. The prime example of these costs is associated with the fact that in order to reach the negotiation stage the parties have to invest cognitive and examination effort and clear their schedules in order to meet, that clearly carries an opportunity cost given by the value of their alternative use of time. An obvious question is then what happens to our set up if at least part of these ex-ante costs can be paid at a later stage, after the pretrial negotiation has taken place. The answer is that provided at least part of these costs cannot be postponed t...

Court Costs and Pretrial Agreement Costs. We start by taking it as given that a suit has in fact been filed. We also abstract from the possibility that P could drop the suit after filing it, which instead will be considered at every stage of the timeline below. All parties are risk-neutral. At this stage it is useful to summarize our notation and write down the payoffs to the players as a consequence of the pretrial costs being paid or not, and the suit being litigated in Court or settled beforehand.9 Pay cDA Not Pay cDA Pay cPA S − cPA, −S − cDA I − cAP − cPT , −I − cDT Not Pay cPA I − cPT , −I − cAD − cTP I − cPT , −I − cDT The first assumption we make stipulates that a pretrial agreement is efficient. In particular, both parties are potentially better off by avoiding a costly trial. Assumption 1. Efficiency of Pre-Trial Agreements: The total cost of a pre-trial agreement is lower than the total cost of going to Court. In other words cT > cA. Assumption 1 implies that negotiating a settlement and not going to trial generates a positive surplus cT − cA. Notice however that after the costs ci are sunk, the only relevant