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WHY STARE DECISIS?

Felli, Leonardo and Anderlini, Luca and Riboni, Alessandro (2011) WHY STARE DECISIS? CEPR Discussion papers, 8266. Centre for Economic Policy Research, London, UK.

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Identification Number: 8266

Abstract

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

Item Type: Monograph (Working Paper)
Official URL: http://www.cepr.org/pubs/dps/DP8266.asp
Additional Information: © 2011 CEPR
Subjects: H Social Sciences > HB Economic Theory
Sets: Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Research centres and groups > Financial Markets Group (FMG)
Collections > Economists Online
Collections > LSE Financial Markets Group (FMG) Working Papers
Date Deposited: 12 Apr 2011 14:20
Last Modified: 27 Feb 2014 15:35
URI: http://eprints.lse.ac.uk/id/eprint/35485

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