The Economics of Litigation and Arbitration: An Application to Franchise Contracts
研究了合同执行中的威慑收益与争议解决成本如何影响当事人选择仲裁还是诉讼，基于特许经营合同数据发现威慑因素比诉讼成本更重要。
If we define the deterrence benefits from contract enforcement to be avoided harms net of avoidance costs, we should expect contracting parties to choose the dispute resolution forum that provides the greatest difference between deterrence benefits and dispute resolution costs. We apply this framework to franchise contracts and conduct an empirical analysis of the determinants of arbitration agreements among franchising parties. Although it is obvious that contracting parties have an incentive to choose arbitration to reduce dispute resolution costs, there have been no studies of the importance of deterrence concerns. We examine the deterrence hypothesis and find a great deal of support for it. Our results suggest that deterrence factors outweigh litigation costs in the design of dispute resolution agreements. We find that the probability of arbitration is significantly higher when the parties rely on implicit contract terms for governance and compliance with those terms is difficult to ensure.