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Stare decisis: Rhetoric and substance

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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.

Suggested Citation

  • Patricio A. Fernández & Giacomo A. M. Ponzetto, 2009. "Stare decisis: Rhetoric and substance," Economics Working Papers 1361, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2010.
  • Handle: RePEc:upf:upfgen:1361
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    1. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
    2. Nicola Gennaioli & Andrei Shleifer, 2007. "The Evolution of Common Law," Journal of Political Economy, University of Chicago Press, vol. 115, pages 43-68.
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    Cited by:

    1. 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.
    2. Gennaioli, Nicola & Ponzetto, Giacomo AM, 2015. "Legal Evolution and Contract Evolution under Imperfect Enforcement," CEPR Discussion Papers 10700, C.E.P.R. Discussion Papers.
    3. Nicola Gennaioli & Giacomo A. M. Ponzetto, 2015. "Contract Innovation and Legal Evolution under Imperfect Enforcement," Working Papers 836, Barcelona Graduate School of Economics.
    4. Guerriero, Carmine, 2016. "Endogenous legal traditions," International Review of Law and Economics, Elsevier, vol. 46(C), pages 49-69.
    5. 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.
    6. 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.

    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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