Game Theory and Mathematical Economics Research Seminar
Lecturer:
Ilan Kremer & Ehud Guttel (HUJI)
Title:
Divide-and-Conquer against Coordinated Plaintiffs
Abstract:
Divide-and-conquer is often viewed as ineffective against coordinated opponents. We show that fee-shifting rules---which can shift litigation costs to plaintiffs based on rejected offers---overturn this intuition in settlement bargaining. A defendant faces multiple plaintiffs whose claims are worth more when more plaintiffs sue, and plaintiffs can coordinate through side contracts. Even so, and even when fee shifting would have no effect against a single plaintiff, it gives the defendant a divide-and-conquer advantage, lowering settlement costs. We characterize optimal mechanisms and show that, when litigation costs are high, the defendant does as well as if side contracts were unavailable.
Location:
Eilan Hall, Feldman Building, Second Floor, Edmond Safra Campus.