This paper characterizes equilibrium outcomes of extensive form games with incomplete information in which players can sign renegotiable contracts with third-parties. Our aim is to understand the extent to which third-party contracts can be used as commitment devices when it is impossible to...

The well-known subprime mortgage crisis, which began to manifest in early 2007, since when the effects of the speculative bubble begin to become evident from the increase in default rates in residential mortgages, has triggered a global crisis that has pushed various legislations over time to...

We consider two-player, perfectly discriminatory, common-value contests (or all-pay auctions), in which one player knows the value of the contested object with certainty, and the other knows only its prior distribution. We show, among other things, that in equilibrium the players win with equal...

We consider imperfectly discriminating, common-value, all-pay auctions (or contests) where some players know the value of the prize, others do not. We show that if the prize is always of positive value, then all players are active in equilibrium. If the prize is of value zero with positive...

Litigation financing is nonrecourse funding of litigation by a non-party for a profit. It is a burgeoning and controversial phenomenon that has penetrated the Unites States in recent years. Since "most of the important phenomena of modern litigation are best understood as results of changes in...

We investigate the impact of observability of contracts between a plaintiff and his attorney on both the efficiency of the environmental conflict and the fairness of the resulting outcome from the environmental conflict. By including two specific game-theoretic models (an observable-contract...

It is possible that a plaintiff uses information about delegation contract as a means of responding strategic interactions between his lawyer and the defendant. We induce this possibility within the class of two-player contests with delegation. In detail, we have the following main results. (i)...

We analyze how reputational concerns of arbitrators affect the quality of their decision process, in particular, information acquisition and bias. We assume that arbitrators differ in their ability to observe the state of the world and that information acquisition is costly and unobservable. We...

This comment on a contribution by Giesela Rühl sheds more light on two critical aspects of the market for contract law. For one thing, many practitioners and academics believe that parties often choose the applicable law without regard to its legal content. Correspondingly, it is questioned...

A setting of reliance investments is explored where one of the parties to a contract obtains private information concerning his utility or cost function that remains hidden to the other party and to courts. As a consequence, it will be a difficult task to award expectation damages corrrectly to...