This dissertation studies the effects of institutions on bargaining outcomes in two domains-labor market and civil litigation. The topic is addressed by using theoretical models, econometric analysis and laboratory experiments.; The second and third chapters are focused on the study of labor market institutions. In an attempt to reduce the incidence of strikes, in July 1992, the state of Pennsylvania modified the statute regulating the collective bargaining of public school teachers, providing school districts the right to hire replacement workers in case of a strike.; The second chapter presents an original game theoretic model of incomplete information. The model predicts that the new bargaining institution reduces the bargaining power of the unions, which decrease the probability of strike and the union's wage settlement proposal. The third chapter reports the results of the empirical tests of these predictions by using a new data set on Pennsylvania public school teachers negotiations during 1983–1999. GMM techniques and random-effects and conditional fixed-effects logit models are used to estimate the wage settlement and likelihood of strike equations. The empirical results suggest that the new institution affects negatively the probability of strike and the settlement wages.; The fourth and fifth chapters analyze the effect of legal institutions on pre-trial bargaining outcomes.; The fourth chapter addresses theoretically the effects of a tort reform introducing the split-award statute, where the State takes a share of the plaintiff's punitive damage award, on firms' spending on accident prevention, the likelihood of out-of-court settlement, and the social costs of accidents. The model predicts that an increase in the state's share of punitive damage award makes the out-of-court settlement more likely, but also reduces the firms' spending on accident prevention and increases the probability of an accident, and therefore, has a negative welfare effect.; The fifth chapter studies, using experimental economics, the effect of a new alternative dispute resolution procedure (ADR), called the settlement escrow, on the likelihood of out-of-court settlements. This ADR consists of adding a preliminary step to the process of pre-trial negotiation under asymmetric information, where the parties submit secret proposals to a third neutral party. The findings suggest that the rate of out-of-court settlement is positively influenced by the escrow under asymmetric information.
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