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Robert H. Mnookin & Robert Wilson, A Model of Efficient Discovery, 25 Games & Econ. Behav. 219 (1998).

Abstract: We construct a model of costly pretrial discovery (represented as learning the drift rate of a diffusion process by observing its path) and settlement negotiations (analyzed as a mechanism design problem) in which the gains from settling are the avoided costs of a trial whose outcome is correlated with their private information. We show that for this particular model, the parties' expected gains from a joint plan of discovery preceding the settlement negotiations are unaffected by their privately known parameters; hence there is no intrinsic impediment to initial agreement on an efficient plan of discovery.