Working Paper: CEPR ID: DP13261
Authors: Christopher Woodruff; Joyce Sadka; Enrique Seira
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.
Keywords: labor courts; settlement; overconfidence; statistical information
JEL Codes: K31; K41; K42; J52; J83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| providing personalized outcome predictions (C52) | settlement rates (E43) |
| providing personalized outcome predictions (C52) | case duration (C41) |
| worker presence during intervention (J22) | settlement rates (E43) |
| worker presence during intervention (J22) | case duration (C41) |
| personalized outcome predictions before plaintiffs contact a lawyer (K35) | pre-suit settlements (K41) |
| personalized outcome predictions (C52) | welfare of workers (J28) |
| worker presence during treatment (J22) | effectiveness of legal representation (K41) |
| personalized outcome predictions (C52) | likelihood of settling cases with modest recovery amounts (K41) |