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Stare Decisis: Rhetoric and Substance

Author

Listed:
  • Patricio A. Fernandez
  • Giacomo A. M. Ponzetto

Abstract

Stare decisis allows common law to develop gradually and incrementally. We show how judge-made law can steadily evolve and tend to increase efficiency even in the absence of new information. Judges' opinions must argue that their decisions are consistent with precedent: this is the more costly, the greater the innovation they are introducing. As a result, each judge effects a cautious marginal change in the law. Alternative models in which precedents are either strictly obeyed or totally discarded would instead predict abrupt large swings in legal rules. Thus, we find that the evolution of case law is grounded not in binary logic fixing judges' constraints, but in costly rhetoric shaping their incentives. We apply this finding to an assessment of the role of analogical reasoning in shaping the joint development of different areas of law. (JEL: K13, K40) The Author 2010. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Patricio A. Fernandez & Giacomo A. M. Ponzetto, 2012. "Stare Decisis: Rhetoric and Substance," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 28(2), pages 313-336.
    • Handle: RePEc:oup:jleorg:v:28:y::i:2:p:313-336
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    File URL: http://hdl.handle.net/10.1093/jleo/ewq006
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    Cited by:

    1. Adam B. Badawi & Scott Baker, 2015. "Appellate Lawmaking in a Judicial Hierarchy," Journal of Law and Economics, University of Chicago Press, vol. 58(1), pages 139-172.
    2. Luca Anderlini & Leonardo Felli & Alessandro Riboni, 2014. "Why Stare Decisis?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 726-738, October.
    3. Nicola Gennaioli & Giacomo A. M. Ponzetto, 2015. "Optimally vague contracts and the law," Economics Working Papers 1410, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2017.
    4. Guerriero, C., 2009. "Democracy, Judicial Attitudes and Heterogeneity: The Civil Versus Common Law Tradition," Cambridge Working Papers in Economics 0917, Faculty of Economics, University of Cambridge.
    5. 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.
    6. Nicola Gennaioli & Giacomo A.M. Ponzetto, 2015. "Contract Innovation and Legal Evolution under Imperfect Enforcement," Working Papers 836, Barcelona School of Economics.
    7. Guerriero, Carmine, 2016. "Endogenous legal traditions," International Review of Law and Economics, Elsevier, vol. 46(C), pages 49-69.

    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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