Overruling and the Instability of Law

Citation:

Gennaioli, Nicola, and Andrei Shleifer. 2007. “Overruling and the Instability of Law.” Journal of Comparative Economics 35 (2): 309-328.
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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 US 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. Journal of Comparative Economics 35 (2) (2007) 309–328. University of Stockholm, 10691 Stockholm, Sweden; Harvard University, M9 Littauer Center, Cambridge, MA 02138, USA.
© 2007 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.

Last updated on 07/26/2012