We study pairwise-stable matchings of lawyers to indigent litigants. In this setting a negative externality arises: assigning a better lawyer to a litigant harms the opposing litigant and their lawyers. We characterize conditions under which stable matchings exist, and show that they correspond to situations in which the cases are primarily differentiated by the advantage they give to one of the sides, but some cases attract more media attention than others. We show that in any stable matching strong lawyers face weak opponents. We show that pairwise-stable matchings are efficient, but may not belong to the core.
JEL: C78, D62
R & R American Law and Economics Review
A plaintiff suffers harm of random value from a defendant. The informed defendant proposes a settlement to the uninformed plaintiff who additionally receives cheap-talk advice from her informed attorney. The attorney can be biased towards or against a trial. A small bias against the trial does not change the outcome of the negotiation. A small bias towards the trial improves the outcome for the plaintiff. The bias may depend on the contract signed by the plaintiff and the attorney. When, the costs of litigation for the plaintiff are large, and the value of the harm is likely to be large, a contingency fee contract is signed and the attorney is biased against the trial. Otherwise, an hourly fee contract is signed and the attorney is biased for the trial. Contracts resulting in no bias are never signed.
JEL: D82, D83, D86, K41
In collective litigations the outcome of the trial may depend on the number of litigants. In this paper, we study how collectives form and explore actions that the defendant can take to interfere in this process. We propose a dynamic model of litigation in which a defendant faces the arrival of plaintiffs over time and where the defendant is privately informed about the scope of the harm she has caused (e.g. how many consumers have been exposed to a defective product). We show that when all plaintiffs are strategic the defendant can completely avoid the formation of a collective. However, if some plaintiffs (exogenously) join the collective then strategic plaintiffs may also join. We compare the baseline, in which all settlements are public, to a setting where the privacy of settlements is endogenous. We show that use of private settlements can decrease expected payments for some plaintiffs but may increase payments to subsequent ones. The defendant gains on the possibility of settling the case secretly only if the plaintiffs prior about the scope of the harm is low.
JEL: D82, D83, K41
We study whether trust towards strangers is a determinant of social networks among an incoming cohort of first-year undergraduate students. We employ an experiment and survey questions to measure students' trust before they have substantial chances to meet and socialize. After four months, during which the students have many opportunities to interact, we elicit five networks capturing different relationships between them. The students' initial levels of trust do not significantly predict the relationships they formed after four months. In contrast, time of exposure, similarity in socioeconomic status, and hometown are relevant determinants of relationship formation.
JEL: C80, D85, D90, D91, Z13