ANTITRUST SETTLEMENTS AND TRIAL OUTCOMES

Risk aversion plays an important role in explaining why antitrust case s settle instead of going to trial. Using a jointly estimated model of settlement and trial outcome, we find that a 1% increase in the proba bility that the plaintiff wins at trial raises the probability of a se ttlement by 0.13%. We also find that reputation effects are not a sign ificant factor for defendants, so the risk aversion of the defendants does not play a dominant role in determining whether the parties settl e. Plaintiffs are more likely to win in certain jurisdictions, which e ncourages venue shopping by plaintiffs.