Common law and civil law as pro-market adaptations
AbstractWe argue that in the development of the Western legal system, cognitive departures are the main determinant of the optimal degree of judicial rule-making. Judicial discretion, seen here as the main distinguishing feature between both legal systems, is introduced in civil law jurisdictions to protect, rather than to limit, freedom of contract against potential judicial backlash. Such protection was unnecessary in common law countries, where free-market relations enjoyed safer judicial ground mainly due to their relatively gradual evolution, their reliance on practitioners as judges, and the earlier development of institutional checks and balances that supported private property rights. In our framework, differences in costs and benefits associated with self-interest and lack of information require a cognitive failure to be active.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1098.
Date of creation: Jun 2008
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Legal systems; judiciary; institutional development; behavior; enforcement;
Find related papers by JEL classification:
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-20 (All new papers)
- NEP-CBE-2008-07-20 (Cognitive & Behavioural Economics)
- NEP-HIS-2008-07-20 (Business, Economic & Financial History)
- NEP-LAW-2008-07-20 (Law & Economics)
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