Asymmetric Reimbursement and Contingent Fees in Environmental Conflicts: Observable vs. Unobservable Contracts

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 game and an unobservable-contract game), we find two key results: (i) The unobservability of a contract may increase inefficiency of the environmental conflict in terms of legal efforts; however, (ii) the unobservability of a contract may increase the fairness of the outcome in terms of the plaintiff's probability of winning the contest.

Automated summary

We examine how the observability of contracts between a plaintiff and attorney affects the efficiency and fairness of environmental conflicts. Using two game-theoretic models (an observable-contract game and an unobservable-contract game), we find two main results: (i) Unobservability of a contract may lead to inefficiency in legal efforts during environmental conflicts; however, (ii) Unobservability of a contract may increase the fairness of the outcome, specifically the plaintiff's probability of winning.