Theory of Claim Resolution.

This article develops a game-theoretic model of claim resolution involving a principal and an agent who observe different pieces of evidence: a global fact observable by both and a local fact observable only by the agent. The model captures disagreements between principal and agent over the "method" of weighting evidence—formalism (overweighting global facts) versus anti-formalism (overweighting local facts)—and over the burden of proof. It shows that despite lacking commitment power, the principal delegates decision-making authority over an interval of global facts, often affirming the agent’s decisions even when contrary to her own preferences, to leverage the agent’s private information. Importantly, the principal prefers anti-formalist agents, who overweight local facts and face credible reversal threats on both valid and invalid decisions, because such agents are easier to motivate and yield better welfare outcomes than formalist agents or those who disagree only on the burden of proof. The findings have implications for judicial hierarchies, loan officer supervision, and bureaucratic delegation, highlighting how the nature of disagreement affects delegation, control, and welfare in hierarchical decision-making.