Working Paper: NBER ID: w12913
Authors: Nicola Gennaioli; Andrei Shleifer
Abstract: We investigate the evolution of common law under overruling, a system of precedent change in which appellate courts replace existing legal rules with new ones. We use a legal realist model, in which judges change the law to reflect their own preferences or attitudes, but changing the law is costly to them. The model's predictions are consistent with the empirical evidence on the overruling behavior of the U.S. Supreme Court and appellate courts. We find that overruling leads to unstable legal rules that rarely converge to efficiency. The selection of disputes for litigation does not change this conclusion. Our findings provide a rationale for the value of precedent, as well as for the general preference of appellate courts for distinguishing rather than overruling as a law-making strategy.
Keywords: common law; overruling; judicial bias; legal stability; precedent
JEL Codes: K13; K4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Judicial biases (K40) | Probability of overruling (D81) |
| Probability of overruling (D81) | Stability of legal rules (K40) |
| Judicial preferences (K16) | Stability of legal rules (K40) |
| Judicial polarization (K16) | Oscillation of law (K40) |
| Judicial biases (K40) | Overall social welfare (D69) |
| Judicial biases (K40) | Convergence to efficient rules (C73) |