Evidence Production, Adversarial Process, and the Private Instigation of Suits

A companion paper, Sanchirico (1997) introduces the concept of "endogenous cost evidence" in a model of single-agent, mandatory hearings. The current paper extends Sanchirico (1997) by adding multiple parties and allowing for the possibility that agents may choose both whether to attend the hearing and whether to compel others to attend. The paper's main contribution is its identification of a fundamental trade-off in civil law design. Essentially, there are two ways to create incentives via civil process: costly evidence production and reliance on opponent reports (a la the literature on correlated types). The drawback of costly evidence production is that evidence costs are a deadweight loss to the system. The drawback of relying on opponent reports is that attaining sufficient information may require holding hearings in many different circumstances and requiring the attendance of many ancillary parties, which can also be costly. We show that the optimal mix of these two types of implementation depends on the size of the "fixed costs" of hearings. This dependence on fixed costs may help explain a climacteric transformation in civil process that took place in England between 1750 and 1850.