IDEAS home Printed from https://ideas.repec.org/a/eee/irlaec/v78y2024ics0144818824000164.html
   My bibliography  Save this article

Bayesian persuasion in lawyer–client communication

Author

Listed:
  • Ayouni, Mehdi
  • Friehe, Tim
  • Gabuthy, Yannick

Abstract

When considering whether to bring a lawsuit, a plaintiff may delegate the decision to her lawyer- better informed about the case’s merits- or consult with her lawyer and decide for herself. Focusing on the latter, we assess how a lawyer communicates with his client about the case’s merits if the client relies on the lawyer’s information to decide whether to bring suit. In some circumstances, the lawyer only partially reveals the case’s merits to persuade the client to bring a suit. In addition, in anticipation of the lawyer’s strategic communication, the plaintiff sometimes adjusts her questions to the lawyer about the case’s merits. Focusing on the communication between lawyers and clients, our paper explores a new consequence of misaligned incentives between the two parties.

Suggested Citation

  • Ayouni, Mehdi & Friehe, Tim & Gabuthy, Yannick, 2024. "Bayesian persuasion in lawyer–client communication," International Review of Law and Economics, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:irlaec:v:78:y:2024:i:c:s0144818824000164
    DOI: 10.1016/j.irle.2024.106196
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0144818824000164
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irle.2024.106196?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
    2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    3. Emons, Winand & Fluet, Claude, 2016. "Why plaintiffs’ attorneys use contingent and defense attorneys fixed fee contracts," International Review of Law and Economics, Elsevier, vol. 47(C), pages 16-23.
    4. Dana, James D, Jr & Spier, Kathryn E, 1993. "Expertise and Contingent Fees: The Role of Asymmetric Information in Attorney Compensation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(2), pages 349-367, October.
    5. James Best & Daniel Quigley, 2024. "Persuasion for the Long Run," Journal of Political Economy, University of Chicago Press, vol. 132(5), pages 1740-1791.
    6. Watts, Alison, 1994. "Bargaining through an Expert Attorney," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 168-186, April.
    7. Nikolaus Schweizer & Nora Szech, 2018. "Optimal Revelation of Life-Changing Information," Management Science, INFORMS, vol. 64(11), pages 5250-5262, November.
    8. Elliot Lipnowski & Doron Ravid & Denis Shishkin, 2022. "Persuasion via Weak Institutions," Journal of Political Economy, University of Chicago Press, vol. 130(10), pages 2705-2730.
    9. Hay, Bruce L, 1996. "Contingent Fees and Agency Costs," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 503-533, June.
    10. Eric Helland, 2003. "Contingency Fees, Settlement Delay, and Low-Quality Litigation: Empirical Evidence from Two Datasets," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 517-542, October.
    11. Penélope Hernández & Zvika Neeman, 2022. "How Bayesian Persuasion Can Help Reduce Illegal Parking and Other Socially Undesirable Behavior," American Economic Journal: Microeconomics, American Economic Association, vol. 14(1), pages 186-215, February.
    12. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    13. Daniel F. Rubinfeld & Suzanne Scotchmer, 1993. "Contingent Fees for Attorneys: An Economic Analysis," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 343-356, Autumn.
    14. Emir Kamenica, 2019. "Bayesian Persuasion and Information Design," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 249-272, August.
    15. Ayouni, Mehdi & Friehe, Tim & Gabuthy, Yannick, 2023. "Asking for information prior to settlement or trial when misrepresentation of evidence is possible," Mathematical Social Sciences, Elsevier, vol. 121(C), pages 26-35.
    16. Jue-Shyan Wang, 2007. "Fee-Shifting Rules in Litigation with Contingency Fees," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 519-546, October.
    17. Claude Fluet, 2009. "Accuracy Versus Falsification Costs: The Optimal Amount of Evidence under Different Procedures," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(1), pages 134-156, May.
    18. A. Mitchell Polinsky & Daniel L. Rubinfeld, 2003. "Aligning the Interests of Lawyers and Clients," American Law and Economics Review, American Law and Economics Association, vol. 5(1), pages 165-188.
    19. Hay, Bruce L, 1997. "Optimal Contingent Fees in a World of Settlement," The Journal of Legal Studies, University of Chicago Press, vol. 26(1), pages 259-278, January.
    20. Daehong Min, 2021. "Correction to: Bayesian persuasion under partial commitment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 765-765, October.
    21. Camille Chaserant & Sophie Harnay, 2015. "Self-regulation of the legal profession and quality in the market for legal services: an economic analysis of lawyers’ reputation," European Journal of Law and Economics, Springer, vol. 39(2), pages 431-449, April.
    22. Andrew T Little, 2023. "Bayesian explanations for persuasion," Journal of Theoretical Politics, , vol. 35(3), pages 147-181, July.
    23. Daehong Min, 2021. "Bayesian persuasion under partial commitment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 743-764, October.
    24. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    25. Emons, Winand, 2000. "Expertise, contingent fees, and insufficient attorney effort," International Review of Law and Economics, Elsevier, vol. 20(1), pages 21-33, March.
    26. Pei, Harry, 2023. "Repeated communication with private lying costs," Journal of Economic Theory, Elsevier, vol. 210(C).
    27. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhou, Junya, 2023. "Costly verification and commitment in persuasion," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1100-1142.
    2. Amy Fanner & Paul Pecorino, 2005. "Dispute Rates and Contingency Fees: An Analysis from the Signaling Model," Southern Economic Journal, John Wiley & Sons, vol. 71(3), pages 566-581, January.
    3. Frank H. Stephen, 2013. "Lawyers, Markets and Regulation," Books, Edward Elgar Publishing, number 14803.
    4. Cotten, Stephen J. & Santore, Rudy, 2012. "Contingent fee caps, screening, and the quality of legal services," International Review of Law and Economics, Elsevier, vol. 32(3), pages 317-328.
    5. Kyung Hwan Baik & In‐Gyu Kim, 2007. "Strategic Decisions On Lawyers’ Compensation In Civil Disputes," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 854-863, October.
    6. Emons, Winand & Garoupa, Nuno, 2004. "The Economics of US-Style Contingent Fees and UK-Style Conditional Fees," CEPR Discussion Papers 4473, C.E.P.R. Discussion Papers.
    7. Andrew F. Daughety & Jennifer F. Reinganum, 2011. "Search, Bargaining, And Agency in the Market for Legal Services," Vanderbilt University Department of Economics Working Papers 1106, Vanderbilt University Department of Economics.
    8. Nuno Garoupa & Fernando Gómez, 2002. "Cashing by the hour: Why large law firms prefer hourly fees over contingent fees," Economics Working Papers 639, Department of Economics and Business, Universitat Pompeu Fabra.
    9. Eduardo Perez-Richet, 2014. "Interim Bayesian Persuasion: First Steps," American Economic Review, American Economic Association, vol. 104(5), pages 469-474, May.
    10. Redlicki, Bartosz & Redlicki, Jakub, 2022. "Communication with Costly and Detectable Falsification," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 452-470.
    11. Eyal Zamir & Ilana Ritov, 2010. "Revisiting the Debate over Attorneys' Contingent Fees: A Behavioral Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 245-288, January.
    12. Hedlund, Jonas, 2017. "Bayesian persuasion by a privately informed sender," Journal of Economic Theory, Elsevier, vol. 167(C), pages 229-268.
    13. repec:hal:spmain:info:hdl:2441/17ekir5v8r8l6qbj0nnrfv4k2h is not listed on IDEAS
    14. repec:spo:wpmain:info:hdl:2441/17ekir5v8r8l6qbj0nnrfv4k2h is not listed on IDEAS
    15. Guillaume R. Fréchette & Alessandro Lizzeri & Jacopo Perego, 2022. "Rules and Commitment in Communication: An Experimental Analysis," Econometrica, Econometric Society, vol. 90(5), pages 2283-2318, September.
    16. Florian Baumann & Tim Friehe, 2012. "Contingent fees meet the British rule: an exploratory study," Public Choice, Springer, vol. 150(3), pages 499-510, March.
    17. Bradley Graham & Jack Robles, 2014. "Moral hazard and legal services contracts," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(3), pages 219-230, September.
    18. Andrew F. Daughtey & Jennifer F. Reinganum, 2010. "Clients, Lawyers, Second Opinions, and Agency," Vanderbilt University Department of Economics Working Papers 1009, Vanderbilt University Department of Economics.
    19. Gabuthy, Yannick & Peterle, Emmanuel & Tisserand, Jean-Christian, 2021. "Legal Fees, Cost-Shifting Rules and Litigation: Experimental Evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    20. Baumann, Florian & Friehe, Tim, 2014. "On discovery, restricting lawyers, and the settlement rate," DICE Discussion Papers 155, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    21. Hagenbach, Jeanne & Koessler, Frédéric, 2020. "Cheap talk with coarse understanding," Games and Economic Behavior, Elsevier, vol. 124(C), pages 105-121.
    22. Vladimir Asriyan & Dana Foarta & Victoria Vanasco, 2023. "The Good, the Bad, and the Complex: Product Design with Imperfect Information," American Economic Journal: Microeconomics, American Economic Association, vol. 15(2), pages 187-226, May.

    More about this item

    Keywords

    Litigation; Communication; Persuasion; Lawyer; Agency;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:78:y:2024:i:c:s0144818824000164. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/irle .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.