nep-law New Economics Papers
on Law and Economics
Issue of 2014‒08‒25
five papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Settlement and Trial: Selected Analyses of the Bargaining Environment By Andrew F. Daughety; Jennifer F. Reinganum
  2. On discovery, restricting lawyers, and the settlement rate By Baumann, Florian; Friehe, Tim
  3. Cross Country Comparison of Regional Mechanisms for Delivery of Free Legal Assistance By World Bank
  4. Mind the Gap: Bridging the Perception and Reality of Crime Rates with Information By Martín Ardanaz; Ana Corbacho; Mauricio Ruiz-Vega
  5. Patent Trolls: Evidence from Targeted Firms By Lauren Cohen; Umit Gurun; Scott Duke Kominers

  1. By: Andrew F. Daughety (Vanderbilt University); Jennifer F. Reinganum (Vanderbilt University)
    Abstract: This Handbook chapter provides a brief review of selected settlement bargaining models in some areas where new work is developing and where additional work is likely to yield yet further important results. This work has focused on what might be thought of as the environment of the settlement negotiation process, where bargaining failure generally results in trial, and our survey will use that perspective to organize the work discussed
    Keywords: Settlement, bargaining
    JEL: K4 C7
    Date: 2014–07–09
  2. By: Baumann, Florian; Friehe, Tim
    Abstract: This paper analyzes the principal-agent relationship between a plaintiff and his or her lawyer when the lawyer's investment in discovery is private information. The plaintiff uses the level of the contingency fee and potentially also restrictions on settlements to guide the lawyer's decision-making. We show that the plaintiff can increase the lawyer's investment in discovery by disallowing a settlement in the event of unsuccessful discovery, thereby reducing the pair's joint surplus. We establish that such a restriction may indeed be privately optimal for the plaintiff but can cast doubt on the social desirability of the discovery process. --
    Keywords: litigation,discovery,moral hazard,principal-agent relationship
    JEL: K41 H23
    Date: 2014
  3. By: World Bank
    Keywords: Law and Development - Judicial System Reform Gender - Gender and Law Law and Development - Legal Products Legal Institutions of the Market Economy Public Sector Development
    Date: 2014–01
  4. By: Martín Ardanaz; Ana Corbacho; Mauricio Ruiz-Vega
    Abstract: Gains from government crime-reducing programs are not always visible to the average citizen. The media overexpose crime events, but the absence of crime rarely makes the news, increasing the risk that citizen may have inaccurate perceptions of security. Through a survey experiment carried out in Bogota, Colombia, a city that experienced a substantial reduction in homicides over the last decade, as well as a noticeable drop in robberies, this paper tests the effect that communicating objective crime trends could have on such perceptions. The results show that information improves perceptions of safety and police effectiveness, and lowers distrust in the police. However, the information treatment is not able to impact those with biased priors, and tends to weaken over time. A more active and regular engagement with citizens regarding these trends is needed to bridge the gap between perception and reality.
    Keywords: Police, Citizen Security & Crime Prevention, Information, Beliefs, Perception, Crime
    Date: 2014–08
  5. By: Lauren Cohen; Umit Gurun; Scott Duke Kominers
    Abstract: We provide theoretical and empirical evidence on the evolution and impact of non-practicing entities (NPEs) in the intellectual property space. Heterogeneity in innovation, given a cost of commercialization, results in NPEs that choose to act as "patent trolls" that chase operating firms' innovations even if those innovations are not clearly infringing on the NPEs' patents. We support these predictions using a novel, large dataset of patents targeted by NPEs. We show that NPEs on average target firms that are flush with cash (or have just had large positive cash shocks). Furthermore, NPEs target firm profits arising from exogenous cash shocks unrelated to the allegedly infringing patents. We next show that NPEs target firms irrespective of the closeness of those firms' patents to the NPEs', and that NPEs typically target firms that are busy with other (non-IP related) lawsuits or are likely to settle. Lastly, we show that NPE litigation has a negative real impact on the future innovative activity of targeted firms.
    JEL: D2 K1 O31
    Date: 2014–08

This nep-law issue is ©2014 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.