Expert Advice Versus Statistical Information: Effects on Settlement Rates in Labor Disputes in Mexico

A distinguishing feature of labor litigation is that plaintiffs are rarely repeat players and therefore often have poor information about probable results of the lawsuit. In developing countries, this problem is exacerbated because a large proportion of fired workers are low-skill, low education and severely under-informed. Furthermore, the evidence suggests that they are overconfident about the outcomes of the lawsuit, which hinders settlement. In this context, we will test and compare two policies to reduce misinformation and increase settlement rates. We will build a calculator using outcomes of recently concluded case files, and provide this “statistical information” on a randomized basis to workers right before their conciliation hearing. We will also provide qualitative advice on their lawsuits through labor law experts who are not their legal representatives and have no stakes in the case. We will carry out detailed surveys to elicit information on trust in the legal advice, expectations before and after interventions, expert prediction of outcomes, and the contract terms between the lawyer and the plaintiff. GPI funded a scale-up of the intervention in its fourth funding round; for more on the scale-up, see this news story from September 2016.