Search, bargaining, and signalling in the market for legal services

• 成果类型: Article
• 署名作者: Daughety, Andrew F.; Reinganum, Jennifer F.
• 署名单位: Vanderbilt University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12012
• 发表日期: 2013
• 页码: 82-103
• 关键词: contingent fees; moral hazard; asymmetric information; ECONOMIC-ANALYSIS; credence goods; COMPETITION; price; equilibrium; expertise; attorneys

摘要

Over the last eight centuries, lawyers in common law countries have generally been precluded from buying their clients' cases. Recently, a number of economists and lawyers have argued that sale should be allowed so as to eliminate moral hazard, particularly when contingent fees are used; this argument is based on full-information reasoning. However, if the lawyer has private information about the case value, then compensation demands potentially signal this value when the client can search over lawyers. We provide a formal model and a family of computational examples that show that allowing (possibly partial) purchase can reduce expected social efficiency.