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Legal efficiency and consistency

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  • Anderlini, Luca
  • Felli, Leonardo
  • Riboni, Alessandro

Abstract

We analyze the efficiency and consistency of court decisions under common and civil law. As a leading example, we study the enforcement of property rights. Judges are of two types: some are conservative and follow the precedent or the statute, while others maximize social welfare. When courts intervene ex-post, after the relevant economic choices have been made, welfare-maximizing courts face a “commitment problem.” Such an ex-post bias has implications on the relative “consistency” and efficiency of each legal system. Surprisingly, we find that court decisions are more consistent under common law than under civil law. The welfare comparison between the two systems is, instead, ambiguous. However, in changing economic environments, common law is more likely to dominate civil law because of its greater adaptability.

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  • Anderlini, Luca & Felli, Leonardo & Riboni, Alessandro, 2020. "Legal efficiency and consistency," European Economic Review, Elsevier, vol. 121(C).
  • Handle: RePEc:eee:eecrev:v:121:y:2020:i:c:s0014292119301837
    DOI: 10.1016/j.euroecorev.2019.103323
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    1. Anderlini, Luca & Felli, Leonardo & Riboni, Alessandro, 2020. "Legal efficiency and consistency," European Economic Review, Elsevier, vol. 121(C).

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    More about this item

    Keywords

    Property right protection; Legal origin; Time-Inconsistency; Investment; Legal adaptability;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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