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|a Fonseca, Miguel A.
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|a Fonseca, Miguel A.
|a Fonseca, Miguel Alexandre
|a Fonseca, Miguel
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|a Preordered service in contract enforcement, 2016
|c Fonseca, M, University of Exeter, Auerbach, J., University of Exeter
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|a To address delay and backlog at civil courts, we propose a procedural rule that we refer to as preordered service to replace sequential service of low-profile cases for breach of contract. Courts pre-announce a list that uses uniquely identifying information to rank potential low-profile contracts, like a combination of contracting parties' taxpayer numbers. They use this list to schedule initial hearings of filed low-profile contract cases in that order. In theory, unlike sequential service, preordered service ensures efficiency in a population of investment games through unraveling. Results from a laboratory experiment suggest that it may substantially reduce court caseloads. Many countries' civil courts experience long delay and large case backlog. The time and resources it takes to enforce contracts may discourage investment into profitable business and impede economic prosperity. Slower courts and larger case backlog have been linked to more breaches of contract and less investment, less lending and tighter credit constraints, higher firm financing costs and smaller firms. So, what reforms can help speed up the courts? Among other things, some have suggested that fewer cases for the courts to look at can help reduce the time it takes to resolve civil disputes. To this end, we propose a procedural rule that aims at reducing the number of court case filings associated with a category of contracts of particularly low profile. The implied reduction in the overall caseload should speed up the courts. As the empirical evidence suggests, faster courts in turn are likely to encourage more investment into profitable business of higher profile---business that is more economically significant and legally complex---leading to more lending, more investment, and more firm growth. With this focus, we propose to preorder the service of such low-profile contract cases at the courts, replacing sequential service, which processes them in order of arrival. If nobody wants to be first in line at the courts, then unraveling reduces the number of such low-profile contract cases being filed. As a consequence, more resources can be allocated to the speedier resolution of higher-profile disputes. We provide proof of concept in the context of a population of low-profile contracts, in an experiment.
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