Games, Information and Evidence Production, With Application to English Legal History

Abstract:     
I study the problem of how the legal system regulates activity outside the courtroom on the basis of information supplied, in court, by interested and potentially dishonest parties. I then apply the framework to the historical evolution of Civil Procedure.

I identify a trade-off between the "fixed costs" of holding hearings and the cost of evidence produced therein. When a party's presentation of evidence is used to set its own liability or recovery, such evidence is useful in setting incentives only to the extent that the party's evidence production costs tend to vary with its behavior in the regulated activity. Such production costs are a loss to the system. The less intense an individual's interest in how her information will be used, the less the need for production costs in insuring reliability. But greater reliance on information from others requires increasing the breadth of circumstances triggering suit and the number of parties to each action.

An increase in the cost of legal process (both fixed costs and production costs) warrants increased reliance on the information supplied by interested parties via costly evidence production. This suggests that increases in the opportunity cost of process, due to increases in labor productivity, were one factor in the gradual shift through English legal history from a system relying mostly on relatively disinterested observers (in the form of the ancient jury) to one relying mostly on costly evidence production by the parties themselves.

Number of Pages in PDF File: 42

JEL Classification: K0, K4, K41, H0

working papers series