Citation

Discussion Paper Details

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Title: Information and Bargaining through Agents: Experimental Evidence from Mexico's Labor Courts

Author(s): Joyce Sadka, Enrique Seira and Christopher Woodruff

Publication Date: October 2018

Keyword(s): Labor courts, overconfidence, Settlement and statistical information

Programme Area(s): Development Economics

Abstract: Well-functioning courts are essential for the health of both financial and real economies. Courts function poorly in most lower-income countries, but the root causes of poor performance are not well understood. We use a field experiment with ongoing cases to analyze sources of dysfunction in Mexico's largest labor court. Providing the parties with personalized outcome predictions doubles settlement rates and reduces average case duration, but only when the worker is present to receive the information. An intervention before plaintiffs contact a lawyer increases pre-suit settlement. The experiment illuminates agency issues among plaintiffs with private lawyers. For most workers, the treatment appears to improve welfare, as measured by discounted payouts and ability to pay bills.

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Bibliographic Reference

Sadka, J, Seira, E and Woodruff, C. 2018. 'Information and Bargaining through Agents: Experimental Evidence from Mexico's Labor Courts'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13261