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Insurers, Illusions Of Judgment & Litigation, Chris Guthrie, Jeffrey J. Rachlinski

Jeffrey J. Rachlinski

Insurers play a critical role in the civil justice system. By providing liability insurance to parties who would otherwise be untenable as defendants, insurers make litigation possible. Once litigation materializes, insurers provide representation, pay legal fees, and often play a central role in resolving disputes through settlement or adjudication. In this paper, we explore empirically how these key litigation players make important decisions in the litigation process, like evaluating a case, deciding whether to settle, and if so, on what terms. We find that insurers that have been shown to distort litigation decision making, appear to make decisions in a …