Enforcing Contracts: Should Courts Seek the Truth?

I examine the case where fulfillment of a contractual commitment is only imperfectly verifiable and ask whether the court should then "tell the truth" regarding the action in dispute. I show that truth seeking does not maximize the expected surplus from contractual relationships. From the parties' viewpoint, the enforcer should disregard some of the available information and should sometimes rule in favor of one party, even though his understanding is that the other party is most probably right. The analysis provides a justification for rules of evidence in common law and for the use by courts of neutral normative priors regarding contending claims.adjudication, contract, enforcement, rules of evidence, standard of proof, value of information.

Enforcing Contracts: Should Courts Seek the Truth?

I examine the case where fulfillment of a contractual commitment is only imperfectly verifiable and ask whether the court should then "tell the truth" regarding the action in dispute. I show that truth seeking does not maximize the expected surplus from contractual relationships. From the parties' viewpoint, the enforcer should disregard some of the available information and should sometimes rule in favor of one party, even though his understanding is that the other party is most probably right. The analysis provides a justification for rules of evidence in common law and for the use by courts of neutral normative priors regarding contending claims. J'analyse le cas où la réalisation d'un engagement contractuel n'est qu'imparfaitement vérifiable. La question posée est de savoir si le tribunal doit alors « dire le vrai » quant aux actions faisant l'objet d'un litige. Je montre que, du point de vue des contractants, la cour devrait faire abstraction d'une partie de l'information disponible et qu'elle devrait parfois statuer en faveur d'un des contractants, même si elle considère plus probable que l'autre ait raison. Cette analyse fournit une justification à certaines règles de procédure en droit civil et elle justifie le recours à des a priori normatifs neutres dans le règlement des différends.Adjudication, contract, enforcement, rules of evidence, standard of proof, value of information, Jugements de cour, exécution des contrats, règles de procédure, standard de preuve, valeur de l'information

Practical Datatype Specializations with Phantom Types and Recursion Schemes

Datatype specialization is a form of subtyping that captures program invariants on data structures that are expressed using the convenient and intuitive datatype notation. Of particular interest are structural invariants such as well-formedness. We investigate the use of phantom types for describing datatype specializations. We show that it is possible to express statically-checked specializations within the type system of Standard ML. We also show that this can be done in a way that does not lose useful programming facilities such as pattern matching in case expressions.Comment: 25 pages. Appeared in the Proc. of the 2005 ACM SIGPLAN Workshop on M

Rules of Proof, Courts, and Incentives

We analyze the design of legal principles and procedures for court decision-making in civil litigation. The objective is the provision of appropriate incentives for potential tort-feasors to exert care, when evidence about care is imperfect and may be distorted by the parties. Efficiency is shown to be consistent with courts adjudicating on the basis of the preponderance of evidence standard of proof together with common law exclusionary rules. Inefficient equilibria may nevertheless also arise under these rules. Directing courts as to the assignment of the burden of proof is then useful as a coordination device. Alternatively, burden of proof guidelines are unnecessary if courts are allowed a more active or inquisitorial role, by contrast with that of passive adjudicator.evidentiary rules, standard of proof, burden of proof, inquisitorial, adversarial, discovery, deterrence

Accuracy versus Falsification Costs: The optimal Amount of Evidence under different Procedures

An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favor at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of them distorts the evidence less than when they testify alone. When the fixed cost of testifying is low, the arbiter hears both, for intermediate values one, and for high values no party at all. The arbiter's ability to remain uninformed as well as sequential testifying makes it more likely that the arbiter requires evidence.evidence production; procedure; costly state falsification; adversarial; inquisitorial

Inequity Aversion in Tournaments

We consider the cost of providing incentives through tournaments when workers are inequity averse and performance evaluation is costly. The principal never benefits from empathy between the workers, by he may benefit from their propensity for envy depending on the costs of assessing performance. More envious employees are preferred when these costs are high, less envious ones when they are low.Tournaments, Inequity aversion, Envy, Incentives, Performance

Group vs. Individual Performance Pay When Workers Are Envious

We consider the effects on reward systems of workers' concern with relative pay by comparing the wage costs of providing incentives through group versus individual bonus schemes. When workers have a propensity for envy, either scheme may be the least cost one depending on the workers' outside opportunities and on the precision of available performance measures. The result follows from the trade-off between the dissatisfaction associated with the prospect of unequal pay and the incentives it generates when workers are envious.Bonus, efficiency wage, envy, fairness, incentives, moral hazard, performance measure, pay equality, wage compression

The Optimal Amount of Falsified Testimony

An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favor at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of them distorts the evidence less than when they testify alone. When the fixed cost of testifying is low, the arbiter hears both, for intermediate values one, and for high values no party at all. The ability to commit to an adjudication scheme makes it more likely that the arbiter requires evidence.Evidence production, procedure, costly state falsification, adversarial, inquisitorial

Non-comparative versus Comparative Advertising as a Quality Signal

Two firms produce a product with a horizontal and a vertical characteristic. We call the vertical characteristic quality. The difference in the quality levels determines how the firms share the market. Firms know the quality levels, consumers do not. Under non-comparative advertising a firm may signal its own quality. Under comparative advertising firms may signal the quality differential. In both scenarios the firms may attempt to mislead at a cost. If firms advertise, in both scenarios equilibria are revealing. Under comparative advertising the firms never advertise together which they may do under non-comparative advertising.advertising; costly state falsification; signalling