Ohio State Journal on Dispute Resolution
compromise, dispute resolution
Dispute Resolution and Arbitration | Law
When two litigants resolve a dispute through out-of-court settlement rather than trial, they realize joint gains of trade equal to the sum of the costs both parties would have incurred had they obtained a trial judgment minus the costs they incur reaching settlement. This opportunity for mutual gain causes most civil lawsuits to settle out-of-court. Yet, in spite of the opportunity for joint gain, negotiations fail in a significant number of lawsuits. One reason for this surprising result is that even when joint gains are substantial and obvious to the litigants, they still must agree on a method of dividing those gains of trade - a delicate and often perilous undertaking.
Chris Guthrie and Russell Korobkin,
Opening Offers and Out-of-Court Settlement: A Little Moderation May Not Go a Long Way, 10 Ohio State Journal on Dispute Resolution. 1
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/709