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Why stare decisis?

Felli, Leonardo, Anderlini, Luca and Riboni, Alessandro (2014) Why stare decisis? Review of Economic Dynamics, 17 (4). pp. 726-738. ISSN 1094-2025

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Identification Number: 10.1016/j.red.2014.02.001

Abstract

All Courts rule ex-post, after most economic decisions are sunk. This can 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 rule of precedent, known as 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: Article
Official URL: http://www.economicdynamics.org/review.htm
Additional Information: © 2014 Elsevier B.V
Divisions: Economics
STICERD
Financial Markets Group
Subjects: H Social Sciences > HB Economic Theory
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C79 - Other
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict; Conflict Resolution; Alliances
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D89 - Other
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K40 - General
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
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)
Date Deposited: 26 Mar 2014 09:39
Last Modified: 20 Mar 2019 02:19
URI: http://eprints.lse.ac.uk/id/eprint/46793

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