De Mot, Jef --- "Bias in the Common Law" [2011] ELECD 1066; in Parisi, Francesco (ed), "Production of Legal Rules" (Edward Elgar Publishing, 2011)

Book Title: Production of Legal Rules

Editor(s): Parisi, Francesco

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848440326

Section: Chapter 8

Section Title: Bias in the Common Law

Author(s): De Mot, Jef

Number of pages: 12

Extract:

8 Bias in the common law
Jef De Mot*



1. Introduction
According to the efficiency of the common law hypothesis, common law
rules (i.e. judge-made law) attempt to allocate resources efficiently, typically
in a Pareto or Kaldor-Hicks efficient way. The common law process enjoys
a comparative advantage over legislation in the creation of efficient law.
Initially, the arguments in favor of the efficiency hypothesis were based on
examination of particular legal doctrines (see Posner, 1973; Ehrlich and Posner,
1974). Because conclusions regarding the efficiency of a particular rule depend
on intuition about the relative magnitudes of costs, many economists were
uncomfortable with the efficiency argument (see Rubin, 2005a). Some of them
have ­ more in line with the standard method in economics ­ sought to identify
a process that would explain Posner's obervation that the common law was
efficient. Several models of efficient legal evolution were created (e.g. Rubin,
1977; Priest, 1977). The essence of these models is that inefficient laws will
be litigated more frequently than efficient laws because the former impose
larger costs on victims. Consequently, inefficient laws will come before the
court for re-examination more often, resulting in a trend toward efficiency.
Other scholars soon began to critically examine these models. For example,
Landes and Posner (1979) argued that litigation might strengthen or weaken a
precedent without overturning it completely and showed that this consideration
weakens the evolutionary pressures for efficiency. Hirshleifer (1982) showed
that the law could come to favor whichever party ...