Comparative Law and Economics
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Comparative Law and Economics

Edited by Theodore Eisenberg and Giovanni B. Ramello

Contemporary law and economics has greatly expanded its scope of inquiry as well as its sphere of influence. The extension to many idiosyncratic topics and issues that sometime lie outside the traditional domain of the discipline have fostered the emergence of a new consciousness better grasped by a comparative approach. The original contributions to this Research Handbook provide a glimpse of the new perspectives that enrich the law and economics methodology.
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Chapter 15: The effect of stakes on settlement: An empirical lesson from Taiwan

Kuo-Chang Huang


Settlement and litigation has long been the topic of a rich body of literature. Scholars of law and economics have developed a variety of theoretical models to explore the factors affecting the mechanism of settlement and suit. Although these models compete with each other and sometimes lead to inconsistent predictions, they as a whole not only greatly enhance our understanding of parties’ disputing behaviors but also shed important light on how these behaviors are driven by economic considerations and influenced by applicable procedural rules. Earlier economic analyses of settlement and suit focus on parties’ divergent expectations of litigation outcomes and attribute the failure of settlement negotiation to, at least one party’s, excessive optimism (Landes 1971; Gould 1973; Posner 1973; Priest & Klein 1984). The basic model of this strand of analyses is straightforward.

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