In a controlled experiment, researchers Russell Korobkin and Chris Guthrie devised a moot legal case involving a landlord-tenant dispute. The participants were told that they had a six-month lease to live in a particular apartment. Two months into the lease, the furnace malfunctioned. The tenant immediately advised the landlord, but he failed or refused to repair the furnace. The tenant spent the remaining four months of the lease trying to keep warm with a space-heater, while continuing to pay $1,000 a month in rent. The participants were advised that they had a “good chance” of recovering some of the $4,000 in rent they had paid to stay in an unheated apartment, but were not given an estimate of the likelihood of success, or the quantum of damages if successful. The participants were told that they filed a claim seeking to recover $4,000. The landlord offered to settle for $900.⁴ The experiment appears to have been designed with a low settlement offer that would not be overly enticing under normal circumstances.
The purpose of the experiment was to gauge the extent to which different explanations of the landlord’s behavior would affect the willingness of the tenants to accept the settlement offer, notwithstanding that the explanations had no legal or economic relevance. Group “A” was given the “broken promise” scenario, which was that the landlord promised to fix the furnace when notified, but failed to do so. Further calls to the landlord resulted in further promises, but no action and no explanation.
Group “B” was given the explanation that the landlord was twice notified about the furnace, but on the second phone call explained that he was dealing with a family emergency out of the country and could not return to deal with the issue. This was called the “family emergency” group.
Group “C” was given the same story as the “broken promise” group, but with the added information that before the trial the landlord approached the tenant and apologized for his behavior, saying he had been under a lot of pressure, and that his failure to act was inexcusable.⁵
All three groups were advised that the landlord’s explanations were not legally relevant and would not be considered by the trial judge in determining the outcome of the case or the quantum of damages at a hearing.
The experimental data confirmed that Group “A,” or the “broken promise” group was the least likely to accept the settlement offer. Group “B” or the “family emergency group” was significantly more likely to accept the offer, and Group “C” or the “apology group,” was also more likely to accept the offer, but not as likely as Group “B” or the “family emergency group.” About 30% of Group “A” or the “broken promise” group indicated that they would “definitely reject” the settlement offer, while only 12% of the “apology group” gave the same answer.⁶
The designers of this particular experiment hypothesized that the results demonstrate that litigants are often concerned with the status of their moral rights relative to the defendant, and not just monetary compensation. The experiment demonstrates that even a relatively weak explanation or a very qualified apology, can improve the uptake of a settlement offer by a statistically significant margin, likely by permitting the plaintiff to see him- or herself restored to a position of moral equality with the perceived wrongdoer.
3 Russell Korobkin and Chris Guthrie, “Psychological Barriers to Litigation Settlement,” 93 Mich. L. Rev. 107 1994-1995 at 149.
4 Korobkin and Guthrie, “Psychological Barriers to Litigation Settlement,” at 145.
5 Russell and Guthrie, “Psychological Barriers to Litigation Settlement,” at 148.
6 Russell and Guthrie, “Psychological Barriers to Litigation Settlement,” at 149.