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Uncertainty of Law and the Legal Process

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  • Giuseppe Dari-Mattiacci
  • Bruno Deffains

Abstract

There is extensive literature on whether courts or legislators produce efficient rules, but which of them produces rules efficiently? Is there an optimal mix of litigation and legislation? The law is inevitably subject to a certain degree of uncertainty ex ante; uncertainty makes the outcomes of trials difficult to predict and, hence, prevents parties from settling disputes out of court. Conversely, the law is necessarily certain ex post: litigation fosters the creation of precedents that reduce uncertainty. We postulate that there is a natural balance between the degree of uncertainty of a legal system (kept under control by litigation) and its litigation rate (sustained by uncertainty). We describe such equilibrium rates of litigation and uncertainty in a formal model, study how they are affected by two different policies -litigation fees/subsidies and legislation - and compare the costs and benefits of the legislative and the judicial process of lawmaking. We then extend the analysis to explore the implications of this approach.

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Paper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2006-11.

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Date of creation: 2006
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Handle: RePEc:ulp:sbbeta:2006-11

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Keywords: incompleteness of law; complexity of law; litigation; judge-made law; legislation.;

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  2. Rachel Levy & Paul Muller, 2006. "Do academic laboratories correspond to scientific communities? Evidence from a large European university," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  3. Giorgio Rampa & Margherita Saraceno, 2014. "Beliefs and Precedent: The Dynamics of Access to Justice," DEM Working Papers Series, University of Pavia, Department of Economics and Management 084, University of Pavia, Department of Economics and Management.
  4. Estelle Dhont-Peltrault & Etienne Pfister, 2007. "R&D cooperation versus R&D subcontracting: empirical evidence from French survey data," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  5. Tapas K. Mishra, 2006. "A Further Look into the Demography-based GDP Forecasting Method," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  6. Frédéric Marty, 2007. "Incertitudes économiques et insécurité juridique : la notion de position dominante collective dans les politiques de concurrence européennes," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2007-20, Observatoire Francais des Conjonctures Economiques (OFCE).
  7. Li Qin & Eleftherios Spyromitros & Moïse Sidiropoulos, 2007. "Monetary Policy with Uncertain Central Bank Preferences for Robustness," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  8. Jalal EL OUARDIGHI & Rabija SOMUN-KAPETANOVIC, 2006. "Convergence des contributions aux inégalités de richesse dans le développement des pays européens," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  9. Jürgen-Peter Kretschmer, 2011. "Optimal Structuring of Assessment Processes in Competition Law: A Survey of Theoretical Approaches," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201114, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  10. Meixing DAI & Moïse SIDIROPOULOS & Eleftherios SPYROMITROS, 2007. "La transparence de la politique monétaire et la dynamique des marchés financiers," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  11. Gisèle Umbhauer, 2007. "De l’amiante au chrysotile, un glissement stratégique dans la désinformation," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  12. Peter Grajzl, 2011. "A property rights approach to legislative delegation," Economics of Governance, Springer, Springer, vol. 12(2), pages 177-200, June.
  13. Dari-Mattiacci, Giuseppe & Deffains, Bruno & Lovat, Bruno, 2011. "The dynamics of the legal system," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 79(1), pages 95-107.
  14. Meixing DAI, 2007. "A two-pillar strategy to keep inflation expectations at bay: A basic theoretical framework," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-20, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  15. Giuseppe Vita, 2012. "Normative complexity and the length of administrative disputes: evidence from Italian regions," European Journal of Law and Economics, Springer, Springer, vol. 34(1), pages 197-213, August.

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