Settlements v. Judgements: A Prospect Theory Analysis
| Autor | Juan Martin Morando |
| Cargo | Universidad Argentina de la Empresa |
| Páginas | 73-88 |
Morando, J. Settlements v. Jugments
73
Revista Facultad de Jurisprudencia RFJ No.13 Junio 2023
Settlements v. Judgements: A Prospect
Theory Analysis
Acuerdos versus sentencias: Un análisis
de la teoría prospectiva
Juan Martín Morando
Universidad Argentina de la Empresa
City: Buenos Aires
Country: Argentina
Original Article (research note)
RFJ, No. 13, 2023, pp. 73 - 88, ISSN 2588-0837
ABSTRACT: When the Rational Choice model reveals itself
insufficient to explain why parties in judicialized Labor
disputes in the Provincia de Buenos Aires prefer to settle over
waiting for a final decision, the Prospect Theory provides a
sound explanation: as Labor Law and Procedural Rules become
applicable, they produce a visible cost-shift to the employer,
so parties expect judges to decide in favor of the workers.
In this scenario, the employer’s perception of what is to be
considered a cost and a benefit become altered, incentivizing
her risk-aversion and leading her to bargain settlements that
she wouldn’t even consider otherwise.
KEYWORDS: Labor Law; Labor Procedure; Settlements and
Decisions; Prospect Theory; Cost-Benefit Analysis.
RESUMEN: Cuando el modelo de Decisión Racional resulta
insuficiente para explicar por qué las partes de un conflicto
laboral judicializado en la Provincia de Buenos Aires prefieren
acordar antes que esperar una decisión judicial, la Prospect
Theory nos brinda una buena explicación: cuando las leyes
DOI 10.26807/rfj.vi.465
Morando, J. Settlements v. Jugments
74
Revista Facultad de Jurisprudencia RFJ No.13 Junio 2023
laborales y las normas procesales laborales resultan aplicables,
se produce una traslación de costos hacia el empleador, por lo
cual las partes esperan que los jueces resuelvan favoreciendo a
los trabajadores. En este escenario, la percepción del empleador
acerca de qué debe considerar como costo y como beneficio se
ve alterada, incentivando su aversión al riesgo y llevándolo a
negociar acuerdos que, de otro modo, no hubiera considerado.
PALABRAS CLAVE: Derecho del Trabajo; Derecho Procesal
del Trabajo; Acuerdos y Sentencias; Prospect Theory; Análisis
Costo-Beneficio.
JEL CODE: J23, J81.
INTRODUCTION
In 2014, the Suprema Corte de Justicia de la
Provincia de Buenos Aires’ decided to propose a change in
Labor Procedural Rules. Their decision was based solely on the
Justices´ perception of a problem: parties decide to settle their
disputes 80% of the time. As they expressed, their concern was
that a decision such as that could only have the explanation that
Labor judges are lazy.
The Justices assumed that those who go to Court
to end their conflict do so because they couldn’t settle it
before. For this reason, it troubled them that, once the courts
intervened, both parties preferred a settlement, which seemed
irrational in their view. For this, it was self-evident that the
courts´ intervention was the cause for this sudden change in
parties’ revealed preferences before filing the lawsuit. For this
reason, Suprema Corte’s argument seemed irrefutable: the
intervention of the Judiciary caused the preferences’ change.
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