Journal of Law, Economics & Organization
We study claim resolution. A claim consists of a global fact and a local fact. The global fact is observed by the principal and the agent. The local fact is observed by the agent alone. The agent resolves the claim; the principal decides whether the agent is more likely wrong or right. The principal and agent can disagree about the weight to accord each fact or the overall evidence threshold. The agent cares whether the principal follows or ignores her advice. We characterize how the equilibrium varies with the nature of disagreement. Despite lacking commitment power, we nd that the principal grants the agent decision-making authority over an interval of global facts.
Scott Baker & Lewis A. Kornhauser, A Theory of Claim Resolution, 39 J.L. Econ. & Org. 77 (2023)
Baker, Scott and Kornhauser, Lewis A., "A Theory of Claim Resolution" (2023). Scholarship@WashULaw. 5.