IDEAS home Printed from https://ideas.repec.org/p/pri/indrel/574.html
   My bibliography  Save this paper

Lawyers as Agents of the Devil in a Prisoner's Dilemma Game

Author

Listed:
  • Orley Ashenfelter

    (Princeton University)

  • David E. Bloom

    (Harvard University)

  • Gordon B. Dahl

    (University of California, San Diego)

Abstract

Do the parties in a typical dispute face incentives similar to those in the classic prisoner's dilemma game? In this paper, we explore whether the costs and benefits of legal representation are such that each party seeks legal representation in the hope of exploiting the other party, while knowing full well that failing to do so will open up the possibility of being exploited. The paper first shows how it is possible to test for the presence of such an incentive structure in a typical dispute resolution system. It then reports estimates of the incentives for the parties to obtain legal representation in wage disputes that were settled by final-offer arbitration in New Jersey. The paper also reports briefly on similar studies of data from discharge grievances, courtannexed disputes in Pittsburgh, and child custody disputes in California. In each case, the data provide evidence that the parties face strong individual incentives to obtain legal representation which makes the parties jointly worse off. Using our New Jersey data, we find that expert agents may well have played a productive role in moderating the biases of their clients, but only early on in the history of the system. Over time, the parties slowly evolved to a non-cooperative equilibrium where the use of lawyers becomes nearly universal, despite the fact that agreeing not to hire lawyers is cheaper and does not appear to alter arbitration outcomes.

Suggested Citation

  • Orley Ashenfelter & David E. Bloom & Gordon B. Dahl, 2013. "Lawyers as Agents of the Devil in a Prisoner's Dilemma Game," Working Papers 1451, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:574
    as

    Download full text from publisher

    File URL: http://dataspace.princeton.edu/jspui/bitstream/88435/dsp01pr76f348m/3/574.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard N. Block & Jack Stieber, 1987. "The Impact of Attorneys and Arbitrators on Arbitration Awards," ILR Review, Cornell University, ILR School, vol. 40(4), pages 543-555, July.
    2. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    3. Charles F. Adams Jr. & Robert F. Cook & Arthur J. Maurice, 1983. "A Pooled Time-Series Analysis of the Job-Creation Impact of Public Service Employment Grants to Large Cities," Journal of Human Resources, University of Wisconsin Press, vol. 18(2), pages 283-294.
    4. Farber, Henry S & Bazerman, Max H, 1986. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," Econometrica, Econometric Society, vol. 54(4), pages 819-844, July.
    5. William M. Landes & Richard A. Posner, 1978. "Adjudication as a Private Good," NBER Working Papers 0263, National Bureau of Economic Research, Inc.
    6. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
    7. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    8. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    9. Bloom, David E, 1986. "Empirical Models of Arbitrator Behavior under Conventional Arbitration," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 578-585, November.
    10. Farber, Henry S & Bazerman, Max H, 1986. "The General Basis of Arbitrator Behavior: An Empirical Analysis of Conventional and Final-Offer Arbitration," Econometrica, Econometric Society, vol. 54(6), pages 1503-1528, November.
    11. repec:fth:prinin:219 is not listed on IDEAS
    12. Henry S. Farber, 1980. "An Analysis of Final-Offer Arbitration," Journal of Conflict Resolution, Peace Science Society (International), pages 683-705.
    13. Ashenfelter, Orley, 1987. "Arbitrator Behavior," American Economic Review, American Economic Association, vol. 77(2), pages 342-346, May.
    14. Orley Ashenfelter & David Bloom, 1981. "Models of Arbitrator Behavior: Theory and Evidence," Working Papers 526, Princeton University, Department of Economics, Industrial Relations Section..
    15. Kiefer, Nicholas M., 1978. "Federally subsidized occupational training and the employment and earnings of male trainees," Journal of Econometrics, Elsevier, vol. 8(1), pages 111-125, August.
    16. Orley Ashenfelter, 1987. "Arbitrator Behavior," Working Papers 599, Princeton University, Department of Economics, Industrial Relations Section..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bruce D. Meyer, 1992. "Policy Lessons from the U.S. Unemployment Experiments," NBER Working Papers 4197, National Bureau of Economic Research, Inc.
    2. Henry S. Farber & Michael J. White, 1993. "A Comparison of Formal and Informal Dispute Resolution in Medical Malpractice," NBER Working Papers 4371, National Bureau of Economic Research, Inc.
    3. Jack Hirshleifer & Evan Osborne, 1996. "The Legal Battle," UCLA Economics Working Papers 749, UCLA Department of Economics.
    4. Juranek, Steffen, 2015. "Investing in legal advice - What determines the costs of enforcing intellectual property rights?," Discussion Papers 2015/20, Norwegian School of Economics, Department of Business and Management Science.
    5. Jean Olson Lanjouw, 1993. "Patent Protection: Of What Value and for How Long?," NBER Working Papers 4475, National Bureau of Economic Research, Inc.
    6. Dr Ronald W. McQuaid, 1994. "Partnerships And Urban Economic Development," Working Paper p13, Departement of Economics, Napier University.
    7. Robert M. Hutchens, "undated". "A Path to Good Jobs? Unemployment and Low Wages: The Distribution of Opportunity for Young Unskilled Workers," Economics Public Policy Brief Archive 11, Levy Economics Institute.
    8. Halla, Martin, 2007. "Divorce and the Excess Burden of Lawyers," IZA Discussion Papers 2962, Institute for the Study of Labor (IZA).
    9. Jack Hirshleifer & Evan Osborne, 1999. "Truth and the Legal Battle," UCLA Economics Working Papers 790, UCLA Department of Economics.

    More about this item

    Keywords

    Prisoners dilemma; new jersey; criminal courts; lawyers; Pittsburgh; child custody; California;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pri:indrel:574. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bobray Bordelon). General contact details of provider: http://edirc.repec.org/data/irprius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.