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The Psychological Case for Retaining Counsel: The Tipping Point Effect

Author

Listed:
  • John Zhuang Liu

    (University of Hongkong)

  • Christoph Engel

    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Yun-chien Chang

    (Cornell Law School)

Abstract

A real-world puzzle has eluded the attention of scholars and policymakers. Using unique data sets covering more than 8 million civil lawsuits in mainland China, Taiwan, and Japan, we observe that parties are often pro se even when high amounts of money are at stake. One (partial) explanation could be a “tipping point effect”: parties are more inclined to be represented by an attorney if they expect the case to be a close call – and less inclined if they believe the odds of winning to be very high or very low. We support the tipping point effect in survey experiments framed as litigation. If the otherwise identical experiment is an unframed lottery, the effect disappears. Based on this evidence, we argue that the effect results from the combination of two behavioral effects: reference point dependence, and competitive spirit.

Suggested Citation

  • John Zhuang Liu & Christoph Engel & Yun-chien Chang, 2025. "The Psychological Case for Retaining Counsel: The Tipping Point Effect," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2025_01, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2025_01
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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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