2026 General Seminar no. 6 - Ben Chen (USyd)

Title: Paper 1: Behavioral Contest Success Functions with Lessons for Settlement and Prospect Theory & Paper 2: An Empirical Study of Family Provision Litigation

by Ben Chen

Abstract:  Paper 1: Two players in a contest game of complete information simultaneously spend to compete for a prize. They have heterogenous contest success functions (CSF). Without specifying a functional form for each CSF, the model accommodates all functions satisfying general and reasonable assumptions. Our assumptions not only capture oft-used functional forms, but also well-documented behavioral traits which existing models cannot capture. These assumptions cover the standard case where each player's probability of winning according to her belief equals her opponent's probability of losing according to her opponent's belief, and the non-standard case where these probabilities are not equal. Optimism/overconfidence, pessimism, non-common priors, prospect theory, and the possibility of a draw are among the phenomena captured by our model. We prove the existence of an interior Nash equilibrium with positive expenses. A necessary and sufficient condition for equilibrium uniqueness is provided. Our model offers novel insights on contestants' incentives to settle or participate in litigation, wars for territorial gain, and similar contests where any prize of winning is a transfer from the loser.
& Paper 2: 

We are witnessing the greatest intergenerational transfer of wealth in history. This inheritance ‘boom’ has been accompanied by growing litigation over inheritance. In Australia, the UK and many other jurisdictions, family provision statutes heavily qualify our freedom of testation. These statutes give the courts discretion to award provision from a deceased’s estate to those whom their will or the rules of intestacy had not provided adequate provision. Family provision litigation now constitutes a significant proportion of the courts’ civil caseload, amounting to around 20% in some jurisdictions (eg NSW Supreme Court 2022: 39, 44-45).

Unfortunately, family provision litigation not only causes significant emotional stress and relationship breakdown, but also frequently generates excessive legal costs. A multi-year study of about 100 family provision cases from NSW and Victoria found that in nearly half, costs drained more than a quarter of the deceased’s estate (Vines 2011: 23). Moreover,

smaller estates were more likely than larger estates to attract disproportionate costs (Vines 2011: 22, 23, 25).

What drives excessive costs in family provision litigation is the problem which animates this paper. I tackle this problem with a contest-theoretic model of litigation which modifies Chen and Rodrigues-Neto’s (see paper 1 above). This model yields testable implications regarding the drivers of excessive costs, and I test such implications on a novel dataset of more than 1,000 family provision disputes given by Anglo-Australian courts in this century. The resulting insights offer guidance for efforts to reduce costs in family provision litigation and beyond.