Information and Bargaining through Agents: Experimental Evidence from Mexico’s Labor Courts
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.
Related
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
