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Costly Evidence Production and the Limits of Verifiability
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Jesse Bull
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July 20, 2008
This paper explores how the costs of disclosing evidence affect the attainment of desirable outcomes in contractual relationships with complete information. Not only does evidence production cost influence the players' incentives to disclose evidence, it also affects their willingness to participate in a contractual relationship in which they may have to disclose evidence to convey information to a court about the state of the relationship. In some situations, evidence costs can interfere with the attainment of efficient outcomes, but in other situations evidence costs can help with attainment of efficient outcomes. A two-player production game in which investment influences the value of production and the players contract so as to shape investment incentives is used to illustrate these situations.
Published Online: 2008-7-20
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Keywords for this article
evidence disclosure;
evidence production cost;
contracts;
implementation;
verifiability
Articles in the same Issue
- Topics Article
- When Stackelberg and Cournot Equilibria Coincide
- Conflict and Consensus: A Theory of Control in Organisations
- Backward Integrated Information Gatekeepers and Independent Divisions in the Product Market
- Identification of Individual Demands from Market Data under Uncertainty
- On the Role of Uncertainty in the Risk-Incentives Tradeoff
- Time-to-Build and the Inverse U-Shape Investment-Uncertainty Relationship
- Revisiting Independence and Stochastic Dominance for Compound Lotteries
- On Competitive Equilibria with Asymmetric Information
- A Duopoly Location Toolkit: Consumer Densities Which Yield Unique Spatial Duopoly Equilibria
- Purchasing Power Parity with Strategic Markets
- Global vs. Local Information in (Anti-)Coordination Problems with Imitators
- Costly Evidence Production and the Limits of Verifiability
- Research Joint Ventures, Optimal Licensing, and the R&D Subsidy Policy
- Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds
- Ex Post Private Information and Monopolistic Screening
- Passing the Buck in Sequential Negotiation
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- The Dirty Face Problem with Unawareness
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- Herd Behavior and Contagion in Financial Markets
- A Constructive Proof that Learning in Repeated Games Leads to Nash Equilibria
- Advances Article
- The Full Surplus Extraction Theorem with Hidden Actions
