IDEAS home Printed from https://ideas.repec.org/a/eee/poleco/v68y2021ics0176268020301476.html
   My bibliography  Save this article

Delegation in a multi-tier court system: Are remands in the U.S. federal courts driven by moral hazard?

Author

Listed:
  • Sarel, Roee
  • Demirtas, Melanie

Abstract

Appellate judges face a trade-off when deciding whether to remand cases: delegating the decision power enables to transfer effort costs to the lower court, but may be costly in terms of ideological preferences and reputation costs. Our empirical analysis of federal cases reveals that this trade-off creates a ‘Subsequent Remand Effect’: cases remanded by the Supreme Court to appellate courts are far more likely to be subsequently remanded to district courts, compared to other cases. This effect varies with judicial ideologies, suggesting that the tendency to (subsequently) remand might be driven by moral hazard problems rather than case-relevant attributes.

Suggested Citation

  • Sarel, Roee & Demirtas, Melanie, 2021. "Delegation in a multi-tier court system: Are remands in the U.S. federal courts driven by moral hazard?," European Journal of Political Economy, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:poleco:v:68:y:2021:i:c:s0176268020301476
    DOI: 10.1016/j.ejpoleco.2020.101999
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0176268020301476
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejpoleco.2020.101999?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. Stephen Jackson & Nadia Vanteeva & Colm Fearon, 2019. "An Investigation of the Impact of Data Breach Severity on the Readability of Mandatory Data Breach Notification Letters: Evidence From U.S. Firms," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 70(11), pages 1277-1289, November.
    3. Giandomenico Majone, 2001. "Two Logics of Delegation," European Union Politics, , vol. 2(1), pages 103-122, February.
    4. Bennedsen, Morten & Schultz, Christian, 2011. "Arm's length delegation of public services," Journal of Public Economics, Elsevier, vol. 95(7), pages 543-552.
    5. Bravo-Hurtado Pablo & Álvaro Bustos, 2019. "Explaining Difference in the Quantity of Cases Heard by Courts of Last Resort," American Law and Economics Review, Oxford University Press, vol. 21(2), pages 346-393.
    6. Adam Bonica & Maya Sen, 2017. "The Politics of Selecting the Bench from the Bar: The Legal Profession and Partisan Incentives to Introduce Ideology into Judicial Selection," Journal of Law and Economics, University of Chicago Press, vol. 60(4), pages 559-595.
    7. Ludema, Rodney D. & Olofsgard, Anders, 2008. "Delegation versus communication in the organization of government," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 213-235, February.
    8. Miguel Á. Malo & Ángel Martín-Román & Alfonso Moral, 2018. "“Peer effects” or “quasi-peer effects” in Spanish labour court rulings," European Journal of Law and Economics, Springer, vol. 45(3), pages 497-525, June.
    9. Jerg Gutmann & Katharina Pfaff & Stefan Voigt, 2017. "Banking crises and human rights," Applied Economics Letters, Taylor & Francis Journals, vol. 24(19), pages 1374-1377, November.
    10. Lorenzo Patelli & Matteo Pedrini, 2014. "Is the Optimism in CEO’s Letters to Shareholders Sincere? Impression Management Versus Communicative Action During the Economic Crisis," Journal of Business Ethics, Springer, vol. 124(1), pages 19-34, September.
    11. Rebecca Hartje & Michael Hübler, 2017. "Smartphones support smart labour," Applied Economics Letters, Taylor & Francis Journals, vol. 24(7), pages 467-471, April.
    12. Muro, Sergio & Amaral-Garcia, Sofia & Chehtman, Alejandro & Garoupa, Nuno, 2020. "Exploring dissent in the Supreme Court of Argentina," International Review of Law and Economics, Elsevier, vol. 63(C).
    13. Martin, Andrew D. & Quinn, Kevin M., 2002. "Dynamic Ideal Point Estimation via Markov Chain Monte Carlo for the U.S. Supreme Court, 1953–1999," Political Analysis, Cambridge University Press, vol. 10(2), pages 134-153, April.
    14. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    15. Harstad, Bård, 2010. "Strategic delegation and voting rules," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 102-113, February.
    16. Lucia Dalla Pellegrina & Nuno Garoupa & Marian Gili, 2020. "Estimating Judicial Ideal Points in Bi‐Dimensional Courts: Evidence from Catalonia," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 17(2), pages 383-415, June.
    17. Richard Williams, 2012. "Using the margins command to estimate and interpret adjusted predictions and marginal effects," Stata Journal, StataCorp LP, vol. 12(2), pages 308-331, June.
    18. Michael Berlemann & Robin Christmann, 2016. "Do judges react to the probability of appellate review? Empirical evidence from trial court procedures," Applied Economics Letters, Taylor & Francis Journals, vol. 23(3), pages 202-205, February.
    19. Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257.
    20. Shavell, Steven, 1995. "The Appeals Process as a Means of Error Correction," The Journal of Legal Studies, University of Chicago Press, vol. 24(2), pages 379-426, June.
    21. Arslan-Ayaydin, Özgür & Boudt, Kris & Thewissen, James, 2016. "Managers set the tone: Equity incentives and the tone of earnings press releases," Journal of Banking & Finance, Elsevier, vol. 72(S), pages 132-147.
    22. Chad Westerland, 2007. "The Judicial Common Space 1," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(2), pages 303-325, June.
    23. Kenneth Lowande, 2018. "Delegation or Unilateral Action?," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(1), pages 54-78.
    24. James J. Heckman, 1976. "Introduction to "Annals of Economic and Social Measurement, Volume 5, number 4"," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, National Bureau of Economic Research, Inc.
    25. Michael Evans & Wayne McIntosh & Jimmy Lin & Cynthia Cates, 2007. "Recounting the Courts? Applying Automated Content Analysis to Enhance Empirical Legal Research," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 4(4), pages 1007-1039, December.
    26. Sofia Amaral-Garcia & Lucia Dalla Pellegrina & Nuno Garoupa, 2020. "Consensus and Ideology in Courts: an Application to the Judicial Committee of the Privy Council," Working Papers 430, University of Milano-Bicocca, Department of Economics, revised Feb 2020.
    27. Cho, Charles H. & Roberts, Robin W. & Patten, Dennis M., 2010. "The language of US corporate environmental disclosure," Accounting, Organizations and Society, Elsevier, vol. 35(4), pages 431-443, May.
    28. Eberhard Feess & Roee Sarel, 2018. "Judicial Effort and the Appeals System: Theory and Experiment," The Journal of Legal Studies, University of Chicago Press, vol. 47(2), pages 269-294.
    29. Laver, Michael & Benoit, Kenneth & Garry, John, 2003. "Extracting Policy Positions from Political Texts Using Words as Data," American Political Science Review, Cambridge University Press, vol. 97(2), pages 311-331, May.
    30. Christina L. Boyd, 2015. "The Hierarchical Influence of Courts of Appeals on District Courts," The Journal of Legal Studies, University of Chicago Press, vol. 44(1), pages 113-141.
    31. Christiansen, Nels, 2013. "Strategic delegation in a legislative bargaining model with pork and public goods," Journal of Public Economics, Elsevier, vol. 97(C), pages 217-229.
    32. Cameron, Charles M. & Segal, Jeffrey A. & Songer, Donald, 2000. "Strategic Auditing in a Political Hierarchy: An Informational Model of the Supreme Court's Certiorari Decisions," American Political Science Review, Cambridge University Press, vol. 94(1), pages 101-116, March.
    33. Adam Hill, 2015. "Does Delegation Undermine Accountability? Experimental Evidence on the Relationship Between Blame Shifting and Control," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 12(2), pages 311-339, June.
    34. Bennedsen, Morten & Schultz, Christian, 2011. "Arm's length delegation of public services," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 543-552, August.
    35. Virginia A. Hettinger & Stefanie A. Lindquist & Wendy L. Martinek, 2004. "Comparing Attitudinal and Strategic Accounts of Dissenting Behavior on the U.S. Courts of Appeals," American Journal of Political Science, John Wiley & Sons, vol. 48(1), pages 123-137, January.
    36. Steven Shavell, 2006. "The Appeals Process and Adjudicator Incentives," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 1-29, January.
    37. Bonica, Adam & Sen, Maya, 2017. "The Politics of Selecting the Bench from the Bar: The Legal Profession and Partisan Incentives to Introduce Ideology into Judicial Selection," Working Paper Series rwp17-048, Harvard University, John F. Kennedy School of Government.
    38. Murat Usman, 2002. "Verifiability and Contract Enforcement: A Model with Judicial Moral Hazard," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 18(1), pages 67-94, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mindock, Maxwell R. & Waddell, Glen R., 2019. "Vote Influence in Group Decision-Making: The Changing Role of Justices' Peers on the Supreme Court," IZA Discussion Papers 12317, Institute of Labor Economics (IZA).
    2. Paul M. Collins, Jr. & Wendy L. Martinek, 2011. "The Small Group Context: Designated District Court Judges in the U.S. Courts of Appeals," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 8(1), pages 177-205, March.
    3. Xi Fu & Xiaoxi Wu & Zhifang Zhang, 2021. "The Information Role of Earnings Conference Call Tone: Evidence from Stock Price Crash Risk," Journal of Business Ethics, Springer, vol. 173(3), pages 643-660, October.
    4. Porgo, Mohamed & Kuwornu, John K.M. & Zahonogo, Pam & Jatoe, John Baptist D. & Egyir, Irene S., 2018. "Credit constraints and cropland allocation decisions in rural Burkina Faso," Land Use Policy, Elsevier, vol. 70(C), pages 666-674.
    5. Santiago Carbo-Valverde & Edward J. Kane & Francisco Rodriguez-Fernandez, 2012. "Regulatory Arbitrage in Cross-Border Banking Mergers within the EU," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(8), pages 1609-1629, December.
    6. Liu, Pu & Nguyen, Hazel T., 2020. "CEO characteristics and tone at the top inconsistency," Journal of Economics and Business, Elsevier, vol. 108(C).
    7. Wisuwat Chujan & Weerachart T. Kilenthong, 2019. "Short-term Impact of an Early Childhood Curriculum Intervention in Rural Thailand," Working Papers 2019-077, Human Capital and Economic Opportunity Working Group.
    8. Bago, Jean-Louis & Ouédraogo, Moussa & Akakpo, Koffi & Lompo, Miaba Louise & Souratié, Wamadini M. & Ouédraogo, Ernest, 2019. "Early Childhood Education and Children Development : Evidence from Ghana," MPRA Paper 95868, University Library of Munich, Germany.
    9. Olayemi M. Olabiyi, 2020. "Electoral participation and household food insecurity in sub‐Saharan Africa," African Development Review, African Development Bank, vol. 32(3), pages 392-403, September.
    10. Flavio Menezes & Magnus Söderberg & Miguel Santolino, 2012. "Regulatory behaviour under threat of court reversal," Discussion Papers Series 472, School of Economics, University of Queensland, Australia.
    11. Nuno Garoupa & Laura Salamero-Teixidó & Adrián Segura, 2022. "Disagreeing in private or dissenting in public: an empirical exploration of possible motivations," European Journal of Law and Economics, Springer, vol. 53(2), pages 147-173, April.
    12. Mekonnen, Tigist, 2017. "Productivity and household welfare impact of technology adoption: Micro-level evidence from rural Ethiopia," MERIT Working Papers 2017-007, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Beilfuss, Svetlana & Linde, Sebastian & Norton, Brandon, 2022. "Accountable care organizations and physician antibiotic prescribing behavior," Social Science & Medicine, Elsevier, vol. 294(C).
    14. Wisuwat Chujan & Weerachart Kilenthong, 2019. "An Early Evaluation of a HighScope-Based Curriculum Intervention in Rural Thailand," PIER Discussion Papers 103, Puey Ungphakorn Institute for Economic Research.
    15. Niblett, Anthony & Yoon, Albert H., 2015. "Judicial disharmony: A study of dissent," International Review of Law and Economics, Elsevier, vol. 42(C), pages 60-71.
    16. Yan Luo & Linying Zhou, 2020. "Textual tone in corporate financial disclosures: a survey of the literature," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 101-110, September.
    17. Qian Wang & Duowen Wu & Lina Yan, 2021. "Effect of positive tone in MD&A disclosure on capital structure adjustment speed: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5809-5845, December.
    18. Banal-Estañol, Albert & Duso, Tomaso & Seldeslachts, Jo & Szücs, Florian, 2022. "R&D spillovers through RJV cooperation," Research Policy, Elsevier, vol. 51(4).
    19. Renuka Sane & Susan Thomas, 2020. "From Participation To Repurchase: Low Income Households And Micro‐insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(3), pages 783-814, September.

    More about this item

    Keywords

    Remands; Federal courts; Appeals; Judicial ideology; Ideological distance;
    All these keywords.

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:68:y:2021:i:c:s0176268020301476. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505544 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.