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Judges' Cognition and Market Order

Author

Listed:
  • Arruñada Benito

    (Universitat Pompeu Fabra)

  • Andonova Veneta

    (Universidad de los Andes)

Abstract

We argue that during the crystallization of common and civil law in the 19th century, the degree of discretion in judicial rulemaking, albeit influenced by the comparative advantages of both legislative and judicial rulemaking, was mainly determined by the anti-market biases of the judiciary. The different degrees of judicial discretion in both legal traditions were thus adapted to different circumstances, mainly the unique, market-friendly, evolutionary transition enjoyed by English common law as opposed to the revolutionary environment of the civil law. On the Continent, constraining judicial discretion was essential for enforcing freedom of contract and establishing a market economy. The long-term confluence of both branches of the Western legal system towards lesser freedom of contract is explained as a consequence of increased perceptions of exogenous risks and changes in the political system. These favored the adoption of sharing solutions that interfered with market-supporting institutions and removed the cognitive advantage of parliaments and political leaders.

Suggested Citation

  • Arruñada Benito & Andonova Veneta, 2008. "Judges' Cognition and Market Order," Review of Law & Economics, De Gruyter, vol. 4(2), pages 665-692, December.
  • Handle: RePEc:bpj:rlecon:v:4:y:2008:i:2:n:6
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    More about this item

    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, Innovation, Technological Change, and Growth - - Economic Development - - - General

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