Information and Bargaining through Agents: Experimental Evidence from Mexico’s Labor Courts

Résumé

Well-functioning courts are essential for upholding the rule of law and underpinning markets. Using data from Mexico’s largest labor court, we document delays, overconfidence, and low settlement rates. In this context we conduct an experiment, providing personalized outcome predictions and conciliation services to a random subset of plaintiffs. The treatment doubles settlement rates, but only when the worker is present to receive the information. This suggests that information asymmetry and agency between plaintiffs and their lawyers are important. We show evidence that the treatment increases the discounted payout to workers. The results replicate across two separate implementations.