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Contingent judicial deference: theory and application to usury laws

Guimaraesy, Bernardo and Meyerhof Salama, Bruno (2017) Contingent judicial deference: theory and application to usury laws. CFM discussion paper series (CFM-DP2017-29). Centre For Macroeconomics, London, UK.

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Abstract

Legislation is less likely to be enforced when courts disagree with it. Building on this premise, we propose a model of Bayesian adjudicators that use their own prior knowledge to evaluate the appropriateness of legislation. The model yields a non-monotonic relation between written rules and effectively enforced rules. Hence the enactment of legislation prohibiting something raises the probability that courts will allow related things not expressly forbidden. Moreover, legal uncertainty is greater with legislation that commands little deference from courts than with legislation that commands none. We discuss examples of effects of legislated prohibitions (and, in particular, usury laws) that are consistent with the model.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information: © 2017 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: K - Law and Economics > K1 - Basic Areas of Law > K12 - Contract Law
K - Law and Economics > K2 - Regulation and Business Law > K22 - Corporation and Securities Law
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K41 - Litigation Process
Sets: Research centres and groups > Centre for Macroeconomics
Date Deposited: 11 Dec 2017 11:37
Last Modified: 03 Mar 2019 00:03
URI: http://eprints.lse.ac.uk/id/eprint/86146

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