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Labour Disputes and the Game of Legal Representation

  • Henri Fraisse

This paper explores the prisoner’s dilemma that may result when workers and firms are involved in labour disputes and must decide whether to hire a lawyer to be represented at trial. Using a representative data set of labour disputes in the UK and a large population of French unfair dismissal cases, we find that a lawyer substantially increases the firm’s probability of winning at trial but has little effect on the worker’s victory probability. The UK data contain award and litigation costs and allow us to compute the pay-off matrix. We do not find evidence of a prisoner’s dilemma, given that the total pay-off for the worker is not significantly different whether she is represented or not. Surprisingly, the dominant strategy for the firm is not to be represented.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2010/wp-cesifo-2010-06/cesifo1_wp3084.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3084.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3084
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  1. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
  2. Wilde, Joachim, 2000. "Identification of multiple equation probit models with endogenous dummy regressors," Economics Letters, Elsevier, vol. 69(3), pages 309-312, December.
  3. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
  4. Martin Halla, 2007. "Divorce and the Excess Burden of Lawyers," Economics working papers 2007-13, Department of Economics, Johannes Kepler University Linz, Austria.
  5. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
  6. Allen McDowell, 2003. "From the help desk: hurdle models," Stata Journal, StataCorp LP, vol. 3(2), pages 178-184, June.
  7. Olivier Blanchard & Thomas Philippon, 2004. "The Quality of Labor Relations and Unemployment," NBER Working Papers 10590, National Bureau of Economic Research, Inc.
  8. Richard N. Block & Jack Stieber, 1987. "The impact of attorneys and arbitrators on arbitration awards," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 40(4), pages 543-555, July.
  9. Henry S. Farber & Michelle J. White, 1991. "Medical Malpractice: An Empirical Examination of the Litigation Process," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 199-217, Summer.
  10. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  11. Kooreman, Peter, 1994. "Estimation of Econometric Models of Some Discrete Games," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(3), pages 255-68, July-Sept.
  12. Bresnahan, Timothy F. & Reiss, Peter C., 1991. "Empirical models of discrete games," Journal of Econometrics, Elsevier, vol. 48(1-2), pages 57-81.
  13. Hirshleifer, Jack & Osborne, Evan, 2001. " Truth, Effort, and the Legal Battle," Public Choice, Springer, vol. 108(1-2), pages 169-95, July.
  14. Orley Ashenfelter & Gordon B. Dahl, 2012. "Bargaining and the Role of Expert Agents: An Empirical Study of Final-Offer Arbitration," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 116-132, February.
  15. Algan, Yann & Cahuc, Pierre, 2007. "La société de défiance : comment le modèle social français s'autodétruit ?," Opuscules du CEPREMAP, CEPREMAP, number 09, May.
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