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Uncertainty of Law and the Legal Process

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  • Guiseppe Dari-Mattiacci

    (ACLE, Universiteit van Amsterdam, and George Mason University, Arlington, Virginia, USA)

  • Bruno Deffains

    (Université Nancy 2, BETA-CNRS, Nancy, France)

Abstract

There is extensive literature on whether courts or legislators produce efficient rules, but which of them produces rules efficiently? The law is subject to uncertainty ex ante; uncertainty makes the outcomes of trials difficult to predict and deters parties from settling disputes out of court. In contrast, the law is certain ex post: litigation fosters the creation of precedents that reduce uncertainty. We postulate that there is a natural balance between the degree of uncertainty of a legal system (kept under control by litigation) and its litigation rate (sustained by uncertainty). We describe such equilibrium rates in a model of tort litigation, study how they are affected by different policies, and compare the costs and benefits of the legislative and the judicial process of lawmaking. This discussion paper has resulted in a publication in the Journal of Institutional and Theoretical Economics , 2007, 163(4), 627-56.

Suggested Citation

  • Guiseppe Dari-Mattiacci & Bruno Deffains, 2006. "Uncertainty of Law and the Legal Process," Tinbergen Institute Discussion Papers 06-071/1, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20060071
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    More about this item

    Keywords

    incompleteness of law; complexity of law; litigation; judgemade law; legislation;
    All these keywords.

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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