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Judicial Fact Discretion

Listed author(s):
  • Nicola Gennaioli
  • Andrei Shleifer

Does it matter for the outcome of a trial who the judge is? Legal practitioners typically believe that the answer is yes, yet legal scholarship sees trial judges as predictably enforcing established law. Following Frank (1951), we suggest here that trial judges exercise considerable discretion in finding facts, which explains the practitioners' perspective and other aspects of trials. We identify two motivations for the exercise of such discretion: judicial policy preferences and judges' aversion to reversal on appeal when the law is unsettled. In the latter case, judges exercising fact discretion find the facts that fit the settled precedents, even when they have no policy preferences. In a standard model of a tort, judicial fact discretion leads to setting of damages unpredictable from true facts of the case but predictable from knowledge of judicial preferences, it distorts the number and severity of accidents, and generates welfare losses. It also raises the incidence of litigation relative to settlement, and encourages litigants to take extreme positions in court, especially in new and complex disputes where the law is unsettled.

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File URL: http://www.nber.org/papers/w12679.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12679.

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Date of creation: Nov 2006
Publication status: published as Nicola Gennaioli & Andrei Shleifer, 2008. "Judicial Fact Discretion," Journal of Legal Studies, University of Chicago Press, vol. 37(1), pages 1-35, 01.
Handle: RePEc:nbr:nberwo:12679
Note: CF LE
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  16. Daughety, Andrew F & Reinganum, Jennifer F, 2000. "On the Economics of Trials: Adversarial Process, Evidence, and Equilibrium Bias," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 365-394, October.
  17. Kaplow, Louis, 1994. "The Value of Accuracy in Adjudication: An Economic Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 307-401, January.
  18. Muhamet Yildiz, 2004. "Waiting to Persuade," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 223-248.
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