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Evidentiary Arbitrage: The Fabrication of Evidence and The Verifiability of Contract Performance

Author

Listed:
  • Chris Sanchirico

    (University of Pennsylvania)

  • George Triantis

    (University of Virginia School of Law)

Abstract

Evidentiary Arbitrage: The Fabrication of Evidence and The Verifiability of Contract Performance - Contract theory identifies verifiability as a critical determinant of the incompleteness of contracts. Although verifiability refers to the cost of proving relevant facts to a court, very little scholarship connects explicitly the evidentiary process to the drafting of substantive contract terms. This paper begins to explore this relationship to provide a more rigorous explanation of contract design. In particular, the paper concerns the very core of verifiability ? truth-finding by a court ? and examines the impact of the prospect of evidence fabrication on contracting. It thereby also explores the puzzling tolerance of the adjudicatory system for fabrication and the incentives to fabricate created by thresholds in burdens of proof. The paper suggests that, despite undermining truth-finding, evidence fabrication may be harnessed by contracting parties to improve the (evidentiary) cost-efficiency of performance incentives in their relationship.

Suggested Citation

  • Chris Sanchirico & George Triantis, "undated". "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.
    • Handle: RePEc:bep:uvalwp:uvalwps-1011
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    File URL: http://law.bepress.com/cgi/viewcontent.cgi?article=1011&context=uvalwps
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    Cited by:

    1. Che, Yeon-Koo & Severinov, Sergei, 2015. "Legal Advice and Evidence with Bayesian and non-Bayesian Adjudicators," Microeconomics.ca working papers sergei_severinov-2015-24, Vancouver School of Economics, revised 31 Dec 2015.
    2. Bull Jesse, 2008. "Costly Evidence Production and the Limits of Verifiability," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-28, July.
    3. Ian A. MacKenzie, 2014. "Precaution with endogenous litigation choices," Discussion Papers Series 535, School of Economics, University of Queensland, Australia.
    4. Chris William Sanchirico, 2008. "A Primary-Activity Approach to Proof Burdens," The Journal of Legal Studies, University of Chicago Press, vol. 37(1), pages 273-313, January.
    5. Liu, Zhiyong & Avraham, Ronen, 2012. "Ex ante versus ex post expectation damages," International Review of Law and Economics, Elsevier, vol. 32(4), pages 339-355.
    6. Albert Choi & George Triantis, 2008. "Completing Contracts in the Shadow of Costly Verification," The Journal of Legal Studies, University of Chicago Press, vol. 37(2), pages 503-534, June.
    7. Jesse Bull, 2013. "Interrogation and Evidence Fabrication," Working Papers 1303, Florida International University, Department of Economics.

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