Contingent Fees, Moral Hazard, and Attorney Rents: A Laboratory Experiment
When attorney effort is not verifiable, previous theoretical work has found that a competitive legal services market may yield an equilibrium contingent fee that is strictly greater than the zero-profit contingent fee. However, these results require fairly sophisticated consumers who recognize that lower contingent fees do not induce sufficient attorney effort. This paper reports on tests of these predictions in an experimental setting.
Volume (Year): 36 (2007)
Issue (Month): 2 (June)
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- Dana, James D, Jr & Spier, Kathryn E, 1993. "Expertise and Contingent Fees: The Role of Asymmetric Information in Attorney Compensation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(2), pages 349-367, October.
- Hay, Bruce L, 1996. "Contingent Fees and Agency Costs," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 503-533, June.
- Santore, Rudy & Viard, Alan D, 2001. "Legal Fee Restrictions, Moral Hazard, and Attorney Rights," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 549-572, October.
- Patricia Munch Danzon, 1983. "Contingent Fees for Personal Injury Litigation," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 213-224, Spring.
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