Contracting on litigation
研究了两个风险规避且主观信念不同的诉讼当事人在审判阴影下通过或有合同来规避风险和投机审判结果，发现这种合同降低了和解率、增加了诉讼量和成本，且与第三方签约会进一步加剧这些影响。
Abstract Two risk‐averse litigants with different subjective beliefs negotiate in the shadow of a pending trial. Through contingent contracts, the litigants can mitigate risk and/or speculate on the trial outcome. Contingent contracting decreases the settlement rate and increases the volume and costs of litigation. These contingent contracts mimic the services provided by third‐party investors, including litigation funders and insurance companies. The litigants (weakly) prefer to contract with risk‐neutral third parties when the capital market is transaction‐cost free. However, contracting with third parties further decreases the settlement rate, increases the costs of litigation, and may increase the aggregate cost of risk bearing.