Graduation Year

2019

Date of Submission

4-2019

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Eric Helland

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2019AndrewJLindquist

Abstract

The Priest-Klein model predicts that a decline in the plaintiff win rate might be explained by a change in stake asymmetry that favors the plaintiff; that is, the stakes for defendants increase. This lowers the plaintiff win rate because defendants increasingly look to settle cases they are less likely to win, leading them to only go to trial with cases they have a comparably higher probability of winning. We theorize a shift like this might have occurred between 1985 and 1995, as Lahav and Siegelman (2017) recently discovered that the plaintiff win rate fell from almost 70% in 1985 to just over 30% in 1995. Although they found that changing judicial caseloads and other factors represented a notable portion of the decline, they were unable to identify what drove the remaining 40%. We hypothesize that this unexplained decline was caused by increasing defendant stakes and examine two potential drivers of increasing stake asymmetry: changing judicial ideology and a rise in the number of Multi-District Litigation (MDL) cases, a type of case with higher defendant stakes. We find evidence consistent with the Priest-Klein model for MDL cases as these cases experienced lower adjudication rates, lower plaintiff win rates, and higher settlement rates. Additionally, we found that judicial ideology was substantially more important for MDL cases, suggesting that judges might make use of their greater influence in these cases to guide outcomes. Yet, while both MDL case status and judicial ideology were statistically significant predictors of plaintiff win rates, we found that neither explains a substantial portion of the decline. Thus, a large proportion of the decline found by Lahav and Siegelman remains a mystery.

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