In Defense of Lawyers. Moral Hazard as an Aid to Cooperation

Karl Wärneryd

No 126, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: This paper studies strategic delegation in two-player contests for an indivisible prize (as in, e.g. litigation) where one party's probability of winning is determined by the relative investments of both. Even though neither player stands to gain anything from the possibility of one player committing himself to an investment level, both players ex ante prefer compulsory representation by agents (e.g. lawyers) whose efforts are unobservable. Thus this paper points out a role for delegation with moral hazard in facilitating cooperation.

Keywords: Strategic delegation; contests; moral hazard; lawyer-client relationship (search for similar items in EconPapers)
JEL-codes: C72 D72 D82 K41 (search for similar items in EconPapers)
Pages: 11 pages
Date: 1996-09
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Citations: View citations in EconPapers (1)

Published in Games and Economic Behavior, 2000, pages 145-158.

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Journal Article: In Defense of Lawyers: Moral Hazard as an Aid to Cooperation (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0126

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