Abstract
An arbiter can decide a case on the basis of his priors, or the two parties to the conflict may present further evidence. The parties may misrepresent evidence in their favor at a cost. At equilibrium the two parties never testify together. When the evidence is much in favor of one party, this party testifies. When the evidence is close to the prior mean, no party testifies. We compare this outcome under a purely adversarial procedure with the outcome under a purely inquisitorial procedure (Emons and Fluet 2009). We provide sufficient conditions on when one procedure is better than the other one.
Highlights
How much testimony will an arbiter hear in adversarial proceedings when the parties to the conflict may spend resources to misrepresent evidence in their favor? Will both parties come forward with boosted claims offsetting each other, or will only the party for whom the evidence is favorable testify? Are there circumstances where no party testifies? What are the efficiency properties of the outcome? Is the adversarial procedure where the parties to the conflict decide whether or not they testify better than the inquisitorial procedure where the arbiter decides how much testimony he wants to hear? In this paper we address these questions.An arbiter has to decide on an issue which we take to be a real number, for example, the damages that one party owes to the other
Our paper is most closely related to the economics literature comparing adversarial with inquisitorial procedures of truth-finding
Let us compare our least-cost equilibrium under the adversarial procedure with the least-cost equilibrium under the inquisitorial procedure which we derive in Emons and Fluet (2009)
Summary
When the arbiter decides to hear no party, he rationally adjudicates the prior mean; there is no falsification but error costs are positive. If incorrect decisions do not matter too much and the fixed cost of testifying is sufficiently large, the adversarial procedure is better than the inquisitorial one. Our paper is most closely related to the economics literature comparing adversarial with inquisitorial procedures of truth-finding In this literature, “inquisitorial” usually refers to a system where a neutral investigator searches for evidence, “adversarial” to one where the parties to the conflict control the uncovering and presentation of evidence; see Shin (1998), Dewatripont and Tirole (1999), Froeb and Kobayashi (2001), and Palumbo (2001).
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