Managerial judges: an economic analysis of the judicial management of legal discovery

I analyze the effect of procedural rules that permit judges to limit pretri al discovery. In the presence of asymmetric information, a litigant may for go settlement before discovery if his opponent interprets a serious offer a s a sign that her discovery is likely to uncover useful evidence, leading h er to invest more in discovery. Furthermore, a litigant may forgo settlemen t in order to strengthen his or her threat of future discovery. I show that by limiting pretrial discovery, the judge can simultaneously increase the probability of early settlement and reduce expected litigation costs, witho ut reducing potential injurers' incentives to take care.