A Theory of Claim Resolution

Posted: 23 Jul 2020 Last revised: 24 Jul 2020

See all articles by Scott Baker

Scott Baker

Washington University in St. Louis - School of Law

Lewis A. Kornhauser

New York University School of Law

Date Written: July 17, 2020

Abstract

We study claim resolution. A claim consists of a global fact observed by the principal and the agent and a local fact the agent alone observes. 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.

We characterize how the equilibrium varies with the nature of disagreement. Despite lacking commitment power, we find that the principal grants the agent decision-making authority over an interval of global facts. Further, we find that the principal can better motivate an agent who excessively weights the local fact than an agent who excessively weights the global fact. The principal strictly prefers the former to the latter, even though each would make the same number of errors if granted complete autonomy. Applications to courts, administrative agencies, and committees are considered.

Suggested Citation

Baker, Scott A. and Kornhauser, Lewis A., A Theory of Claim Resolution (July 17, 2020). Washington University in St. Louis Legal Studies Research Paper No. 20-07-04, Available at SSRN: https://ssrn.com/abstract=3659426

Scott A. Baker (Contact Author)

Washington University in St. Louis - School of Law ( email )

Campus Box 1120
St. Louis, MO 63130
United States

Lewis A. Kornhauser

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
(212) 998-6175 (Phone)
(212) 995-4341 (Fax)

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