I have just done you a big favor! I mean BIG!

I just digested a 40-page research article with some very interesting findings into this email. I am not kidding—for you to read this, you would have had to deal with the “Multinomial Logistic Regression Results” and other “chi Square” kinds of statistical issues.

An article by Kiser, Asher, and McShane (Journal of Legal Studies, Vol. 5, Issue 3, pages 551-591, September, 2008) examined 2,054 California cases in which arbitration failed and offers were made by one side or the other, but the case went to trial. The study compared the offer to the verdict and calculated the rates of decision errors made by plaintiffs and defendants. Here are some of those results in capsule form for you:

1. There were more decision errors made by plaintiffs than defendants (plaintiffs got equal to or less than the defendant’s offer 61% of the time, while defendants got hit harder by the verdict than the plaintiff offer only 24% of the time).
2. However, the average cost of the plaintiff error was only $43,100, while the average cost of the defendant’s error was $1,140,000.
3. For those of you on my list trying cases in California, making a 998 offer significantly decreased decision errors for the serving party and correspondingly increased the error rate for the receiving party.
4. Check this table below for the types of cases and their corresponding error rates (numbers have been rounded):

Interesting data.

How do you reduce error rates in decision-making? Pre-trial research (focus groups/mock trials). Sufficient sample sizes in pre-trial research can assist in making reasonable trial outcome predictions, giving you the edge in the decision-making process.