Information and Bargaining through Agents: Experimental Evidence from Mexico’s Labor Courts
While observers agree that courts function poorly in developing countries, a lack of data has limited our understanding of the causes of malfunction. We combine data from administrative records on severance cases filed in the Mexico City Labor Court with interventions that provide information to parties in randomly selected cases on predicted case outcomes and conciliation services. We first use the data to document a set of stylized facts about the functioning of the court. The interventions nearly double the overall settlement rate, but only when the plaintiff herself is present to receive the information directly. Administrative records from six months after the treatment indicate that the treatment effects remain unchanged over that period, even though an additional one in three cases in the control group settle in that period. The post-treatment results indicate that lawyers do not convey the information provided in the intervention to their clients. A simple analytic framework rationalizes the experimental results. Analysis of settlements induced by the interventions suggests that the provision of information is welfare-improving for the plaintiffs. The experimental results replicate over two phases conducted in different sub-courts, showing robustness.
We acknowledge financial support from the Government Partnership Initiative of the Abdul-Latif Jameel Poverty Action Lab (JPAL) at the Massachusetts Institute of Technology, the Economic Development Institutions program of the UK’s Department for International Development (DFID), and the Asociacion Mexicana de Cultura (ITAM). We also acknowledge crucial institutional, operational, and human resource support from the Mexico City Labor Court and its president, Darlene Rojas Olvera. The research reported in the paper was carried out with the approval of the ITAM Institutional Review Board. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.