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Legal Contests with Unilateral Delegation

Author

Listed:
  • Park Sung-Hoon

    (Chosun University, Department of Economics, Gwangju, Korea (the Republic of))

  • Lee Sanghack

    (Kookmin University, Department of International Commerce, Seongbok-gu, Korea (the Republic of))

Abstract

We examine a legal contest in which only one litigant hires a delegate who expends his effort on behalf of the litigant. The delegation contract between the litigant and the delegate is either observable or unobservable. Comparing the equilibrium outcomes of the two legal contests, we derive the effect of the observability of the contract. We find that the favorite litigant and his delegate prefer the observable contract to the unobservable one. If the litigant is the underdog, however, there is conflict of interest between the litigant and his delegate as the litigant prefers the observable contract to the unobservable one while his delegate prefers the unobservable contract. We also show that the legal contest with the observable contract incurs more total expenditure than the legal contest with the unobservable contract if the litigant hiring the delegate is the favorite, and vice versa.

Suggested Citation

  • Park Sung-Hoon & Lee Sanghack, 2020. "Legal Contests with Unilateral Delegation," Asian Journal of Law and Economics, De Gruyter, vol. 11(1), pages 1-9, April.
    • Handle: RePEc:bpj:ajlecn:v:11:y:2020:i:1:p:9:n:1
    DOI: 10.1515/ajle-2019-0031
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    References listed on IDEAS

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    1. Baik, Kyung Hwan & Lee, Sanghack, 2007. "Collective rent seeking when sharing rules are private information," European Journal of Political Economy, Elsevier, vol. 23(3), pages 768-776, September.
    2. Park Sung-Hoon & Lee Sanghack, 2019. "How Do Risk-Averse Litigants Set Contingent Fees for Risk-Neutral Lawyers?," Review of Law & Economics, De Gruyter, vol. 15(2), pages 1-19, July.
    3. Kyung Hwan Baik & Jihyun Kim, 2014. "Contests with Bilateral Delegation: Unobservable Contracts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(3), pages 387-405, September.
    4. Avinash Dixit, 2008. "Strategic Behavior in Contests," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 431-438, Springer.
    5. Nitzan, Shmuel & Ueda, Kaoru, 2011. "Prize sharing in collective contests," European Economic Review, Elsevier, vol. 55(5), pages 678-687, June.
    6. Byung In Lim & Jason Shogren, 2004. "Unilateral delegation and reimbursement systems in an environmental conflict," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 489-493.
    7. Lambert Schoonbeek, 2002. "A delegated agent in a winner-takes-all contest," Applied Economics Letters, Taylor & Francis Journals, vol. 9(1), pages 21-23.
    8. Levent Koçkesen & Efe A. Ok, 2004. "Strategic Delegation By Unobservable Incentive Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 397-424.
    9. Sung-Hoon Park, 2010. "Asymmetric reimbursement system in an environmental conflict," Applied Economics Letters, Taylor & Francis Journals, vol. 17(12), pages 1197-1199.
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    Cited by:

    1. Sung-Hoon Park & Jason F. Shogren, 2021. "A Virtuous Circle of Governance Contests with Externalities," Sustainability, MDPI, vol. 13(14), pages 1-12, July.
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    3. Sung-Hoon Park, 2022. "Contingent fees and endogenous timing in litigation contests," European Journal of Law and Economics, Springer, vol. 54(3), pages 453-473, December.

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