Publication Type
Working Paper
Version
publishedVersion
Publication Date
4-2012
Abstract
Why do agents engage in costly dispute resolution such as litigation and arbitration when costless settlement is available? I present a model with one sided asymmetric information where the payoff from litigation for both agents depends on the beliefs of the uninformed agent. Taking these payoffs as their outside options, agents negotiate over the allocation of an indivisible object that is in dispute and transfers. It is shown that it is impossible to implement an allocation that satisfies budget balance that guarantees the agents their payoff from conflict when agents can quit negotiations unilaterally at any stage.
Discipline
Labor Economics
Research Areas
Economic Theory
First Page
1
Last Page
30
Publisher
SMU Economics and Statistics Working Paper Series, No. 18-2012
City or Country
Singapore
Citation
ANEY, Madhav S..
Conflict with Quitting Rights: A Mechanism Design Approach. (2012). 1-30.
Available at: https://ink.library.smu.edu.sg/soe_research/1385
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.