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Costly Evidence Production and the Limits of Verifiability

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Author Info
Jesse Bull () (Department of Economics, Florida International University)

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Abstract

This paper explores the limits of "verifiability" induced by the process of costly evidence production in contractual relationships of complete information. I study how the cost of providing evidence (disclosing documents) influences the set of enforceable contracts. I show that evidence cost can be both beneficial and detrimental with regard to enlarging the set of settlement outcomes that can be implemented. Further, I study how what can be considered verifiable is influenced by parties’ incentives to produce evidence and by the particular evidence cost structure. My analysis includes the opportunity for contracting parties to renegotiate (or settle) prior to the enforcement phase. I also study how the availability of redundant documents expands the set of enforceable contracts, and discuss the relevance of my findings to the design of legal institutions.

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File URL: http://www.fiu.edu/orgs/economics/wp2006/06-11.pdf
File Format: application/pdf
File Function: Revised version, 2006
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Publisher Info
Paper provided by Florida International University, Department of Economics in its series Working Papers with number 0611.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 30 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:fiu:wpaper:0611

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Related research
Keywords: contracts; verifiability;

Other versions of this item:

Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bull, Jesse & Watson, Joel, 2004. "Evidence disclosure and verifiability," Journal of Economic Theory, Elsevier, vol. 118(1), pages 1-31, September. [Downloadable!] (restricted)
    Other versions:
  2. Eric Maskin & John Moore, 1999. "Implementation and Renegotiation," Harvard Institute of Economic Research Working Papers 1863, Harvard - Institute of Economic Research.
    Other versions:
  3. Hyun Song Shin, 1998. "Adversarial and Inquisitorial Procedures in Arbitration," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 378-405, Summer. [Downloadable!] (restricted)
  4. Jesse Bull, 2008. "Mechanism Design with Moderate Evidence Cost," Contributions to Theoretical Economics, Berkeley Electronic Press, vol. 8(1), pages 1446-1446. [Downloadable!] (restricted)
  5. Andrew F. Daughety & Jennifer F. Reinganum, 2000. "Appealing Judgments," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 502-526, Autumn.
  6. repec:att:wimass:1920123 is not listed on IDEAS
  7. Chris Sanchirico & George Triantis, . "Evidentiary Arbitrage: The Fabrication of Evidence and The Verifiability of Contract Performance," University of Virginia John M. Olin Program for Law & Economics Working Paper Series uvalwps-1011, University of Virginia School of Law. [Downloadable!]
  8. Okuno-Fujiwara, Masahiro & Postlewaite, Andrew & Suzumura, Kotaro, 1990. "Strategic Information Revelation," Review of Economic Studies, Blackwell Publishing, vol. 57(1), pages 25-47, January. [Downloadable!] (restricted)
  9. Froeb, Luke M. & Kobayashi, Bruce H., 2001. "Evidence production in adversarial vs. inquisitorial regimes," Economics Letters, Elsevier, vol. 70(2), pages 267-272, February. [Downloadable!] (restricted)
  10. Daughety, Andrew F & Reinganum, Jennifer F, 2000. "On the Economics of Trials: Adversarial Process, Evidence, and Equilibrium Bias," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 365-94, October.
  11. Cooter, Robert D & Rubinfeld, Daniel L, 1994. "An Economic Model of Legal Discovery," Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 435-63, January.
  12. Chris William Sanchirico, 2004. "Games, Information, and Evidence Production: With Application to English Legal History," Law and Economics 0403002, EconWPA. [Downloadable!]
  13. Shepherd, George B., 1999. "An empirical study of the economics of pretrial discovery," International Review of Law and Economics, Elsevier, vol. 19(2), pages 245-263, June. [Downloadable!] (restricted)
  14. Steven Shavell, 1989. "Sharing of Information Prior to Settlement or Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 183-195, Summer. [Downloadable!] (restricted)
  15. Gong, Jiong & McAfee, R Preston, 2000. "Pretrial Negotiation, Litigation, and Procedural Rules," Economic Inquiry, Oxford University Press, vol. 38(2), pages 218-38, April.
  16. Bernardo, Antonio E & Talley, Eric & Welch, Ivo, 2000. "A Theory of Legal Presumptions," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(1), pages 1-49, April.
    Other versions:
  17. Joel Watson & Jesse Bull, 2006. "Hard Evidence and Mechanism Design," University of California at San Diego, Economics Working Paper Series 2002-16R, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
  18. Evans, R., 2006. "Mechanism Design with Renegotiation and Costly Messages," Cambridge Working Papers in Economics 0626, Faculty of Economics, University of Cambridge. [Downloadable!]
  19. Alan Schwartz & Joel Watson, . "The Law and Economics of Costly Contracting," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1004, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy. [Downloadable!]
    Other versions:
  20. Daniel L. Rubinfeld & David E.M. Sappington, 1987. "Efficient Awards and Standards of Proof in Judicial Proceedings," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 308-315, Summer. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. C. Manuel Willington, 2004. "Hold-Up under Costly Litigation and Imperfect Courts of Law," Econometric Society 2004 Latin American Meetings 231, Econometric Society. [Downloadable!]
    Other versions:
  2. Alan Schwartz & Joel Watson, . "The Law and Economics of Costly Contracting," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1004, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy. [Downloadable!]
    Other versions:
  3. Chris Sanchirico & George Triantis, . "Evidence Arbitrage: The Fabrication of Evidence and the Verifiability of Contract Performance," Scholarship at Penn Law upenn_wps-1005, University of Pennsylvania Law School. [Downloadable!]
    Other versions:
  4. Jesse Bull & Joel Watson, 2002. "Hard Evidence and Mechanism Design," University of California at San Diego, Economics Working Paper Series 2002-16R1, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
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