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Why Stare Decisis?

  • Luca Anderlini
  • Leonardo Felli
  • Alessandro Riboni

All Courts rule ex-post, after most economic decisions are sunk. This might generate a time-inconsistency problem. From an ex-ante perspective, Courts will have the (ex-post) temptation to be excessively lenient. This observation is at the root of the principle of stare decisis. Stare decisis forces Courts to weigh the benefits of leniency towards the current parties against the beneficial effects that tougher decisions have on future ones. We study these dynamics and find that stare decisis guarantees that precedents evolve towards ex-ante efficient decisions, thus alleviating the Courts' time-inconsistency problem. However, the dynamics do not converge to full efficiency.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 661465000000000068.

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Date of creation: 16 Jun 2010
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Handle: RePEc:cla:levarc:661465000000000068
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  1. Luca Anderlini & Leonardo Felli & Alessandro Riboni, 2008. "Statute Law or Case Law?," STICERD - Theoretical Economics Paper Series /2008/528, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  2. Luca Anderlini & Leonardo Felli & Andrew Postlewaite, 2003. "Should Courts Always Enforce What Contracting Parties Write?," PIER Working Paper Archive 06-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Oct 2006.
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