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Tipping the Scales – Settlement, Appeal and the Relevance of Judicial Ambition

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  • Christmann Robin

    (Institute for Political Economics, Helmut-Schmidt University, Holstenhofweg 85, 22043 Hamburg, Germany)

Abstract

Judges become ambitious decision makers when they face appellate review. This paper applies a contract theoretic perspective to the behavior of self-interested trial judges in a two-level court system and analyzes how different judicial stereotypes affect contracting in “the shadow of” the court. Confronted with the factual ambiguity of a case, maximizing judges pursue an (privately) optimal strategy and tip the scales of the trial outcome. The model reveals that careerist judges will deliberately allow for a certain probability of judicial error in their decisions to pursue “self-advertisement” at the appeal court. Furthermore, the strongest fact-finding judge is tempted by in-trial settlements to evade the risk of appellate review, and does not foster contract verifiability to the desirable extent. Our implications put into perspective the function of appellate courts to promote court accuracy. Additionally, a judicial tendency to conclude lawsuits through in-court settlements may strain contract output.

Suggested Citation

  • Christmann Robin, 2015. "Tipping the Scales – Settlement, Appeal and the Relevance of Judicial Ambition," Review of Law & Economics, De Gruyter, vol. 11(2), pages 171-207, July.
    • Handle: RePEc:bpj:rlecon:v:11:y:2015:i:2:p:171-207:n:4
    DOI: 10.1515/rle-2015-0021
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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