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The Role of Judges in Selecting Efficient Norms in a Common Law System: A Law and Economics Perspective

  • Diogo Augusto Vidal Padre EMAIL logo and Leandro Chaves Rêgo
Published/Copyright: April 11, 2024
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Abstract

This study delves into the common law efficiency theory, proposing that the efficiency of legal norms in common law systems predominantly depends on judges’ biases towards efficiency. By developing an economic model, it is demonstrated that the proportion of efficient norms correlates with the predisposition of judges towards efficiency, influenced by their personal beliefs. Historical analysis of common and civil law systems reveals that neither inherently guarantees efficiency; rather, their efficiency is contingent upon their adaptability to societal needs and prevailing judicial ideologies. The paper concludes that the efficiency of a legal system relies on its congruence with societal values and judicial ideologies, emphasizing that shifts in the judiciary’s ideological makeup have implications on legal system efficiency. This research contributes to a deeper understanding of the multifaceted process shaping legal norms in common law, highlighting the critical role of judges, societal values, and legislative dynamics.

JEL Classification: B40; K00; K41

Corresponding author: Diogo Augusto Vidal Padre, Law School, Universidade of Brasilia, Brasilia, DF, Brazil, E-mail:

Appendix

This appendix outlines the mathematical process used to derive the equilibrium values within our model of legal rule selection in a common law system.

The model posits two populations: current norms (efficient and inefficient) and proposed norms (efficient and inefficient), with judges acting as selectors through litigation outcomes. The probability matrix for litigation outcomes is defined as shown in Table 1, where p i represents the probability of the current norm being retained.

The proportions of efficient and inefficient norms in the legal system are represented, respectively, by x 1, x 2 (current norms) and y 1, y 2 (proposed norms), with x 1 + x 2 = 1 and y 1 + y 2 = 1.

Let x 1 , x 2 , y 1 and y 2 represent the respective proportions after litigation between current and proposed norms. Then, it follows that, x 1 + x 2 = 1 and y 1 + y 2 = 1 , where:

(A1) x 1 = x 1 y 1 + x 1 y 2 p 2 + x 2 y 1 ( 1 p 3 )

and

(A2) y 1 = x 1 y 1 ( 1 p 1 ) + x 2 y 1 ( 1 p 3 ) x 1 y 1 ( 1 p 1 ) + x 2 y 1 ( 1 p 3 ) + x 1 y 2 ( 1 p 2 ) + x 2 y 2 ( 1 p 4 )

In equilibrium, the proportions of efficient and inefficient norms within the legal system are fixed, such that x 1 = x 1 = x * and y 1 = y 1 = y * , signifying that the ratios of these norms remain constant. Given that x 2 = 1 − x 1 and y 2 = 1 − y 1 these expressions can be simplified as follows:

(A3) x 1 = x 1 y 1 + x 1 ( 1 y 1 ) p 2 + ( 1 x 1 ) y 1 ( 1 p 3 )

Equating x 1 = x 1 = x * and y 1 = y 1 = y * , we isolate x * to have:

(A4) x * = y * ( 1 p 3 ) 1 p 2 + y * ( p 2 p 3 )

and

(A5) y 1 = x 1 y 1 ( 1 p 1 ) + ( 1 x 1 ) y 1 ( 1 p 3 ) x 1 y 1 ( 1 p 1 ) + ( 1 x 1 ) y 1 ( 1 p 3 ) + x 1 ( 1 y 1 ) ( 1 p 2 ) + ( 1 x 1 ) ( 1 y 1 ) ( 1 p 4 )

If we equate y 1 = y 1 = y * and x 1 = x 1 = x * , and divide both sides of the equation by y * (assuming that y * is not zero), we obtain:

(A6) 1 = x * ( 1 p 1 ) + ( 1 x * ) ( 1 p 3 ) x * y * ( 1 p 1 ) + ( 1 x * ) y * ( 1 p 3 ) + x * ( 1 y * ) ( 1 p 2 ) + ( 1 x * ) ( 1 y * ) ( 1 p 4 )

(A7) x * y * ( 1 p 1 ) + ( 1 x * ) y * ( 1 p 3 ) + x * ( 1 y * ) ( 1 p 2 ) + ( 1 x * ) ( 1 y * ) ( 1 p 4 ) = x * ( 1 p 1 ) + ( 1 x * ) ( 1 p 3 )

(A8) x * [ y * ( 1 p 1 ) y * ( 1 p 3 ) + ( 1 y * ) ( 1 p 2 ) ( 1 y * ) ( 1 p 4 ) ( 1 p 1 ) + ( 1 p 3 ) ] = ( 1 p 3 ) y * ( 1 p 3 ) ( 1 y * ) ( 1 p 4 )

(A9) x * [ y * ( 1 p 1 ) y * ( 1 p 3 ) + ( 1 y * ) ( 1 p 2 ) ( 1 y * ) ( 1 p 4 ) ( 1 p 1 ) + ( 1 p 3 ) ] = ( 1 p 3 ) y * ( 1 p 3 ) ( 1 y * ) ( 1 p 4 )

(A10) x * = ( p 4 p 3 ) ( 1 y * ) ( y * 1 ) ( p 3 p 1 + p 2 p 4 )

Assuming that y *≠1, we have:

(A11) x * = ( p 3 p 4 ) ( p 3 p 1 + p 2 p 4 ) = ( p 3 p 4 ) ( p 3 p 4 ) + ( p 2 p 1 )

If we equate the right sides of Equations (A4) and (A11), we obtain:

(A12) y * ( 1 p 3 ) 1 p 2 + y * ( p 2 p 3 ) = ( p 3 p 4 ) ( p 3 p 1 + p 2 p 4 )

Therefore,

(A13) y * = ( 1 p 2 ) ( p 3 p 4 ) ( 1 p 3 ) ( p 3 p 1 + p 2 p 4 ) ( p 2 p 3 ) ( p 3 p 4 )

(A14) y * = ( 1 p 2 ) ( p 3 p 4 ) ( p 3 p 1 + p 2 p 4 ) + p 3 p 1 2 p 2 p 3 + p 2 p 4

(A15) y * = ( 1 p 2 ) ( p 4 p 3 ) ( 1 p 2 ) ( p 4 p 3 ) + ( p 1 p 2 ) ( 1 p 3 )

We categorize judges based on their biases towards efficiency or inefficiency, reflecting their preference for norms that either enhance or detract from societal welfare, respectively. We also incorporate the concept of effort aversion, indicating a reluctance to exert additional effort unless a proposed norm closely aligns with their biases. This introduces a variable, q, to denote the probability of maintaining current norms, recognizing that norms aligned with judges’ preferences might not always be adopted. The matrices in Table 2 for efficiency-biased judges and Text Table 3 for inefficiency-biased judges represent these concepts.

Let the fraction of judges with a preference for efficiency in society be represented by p; then, the matrix shown in Table 4 illustrates the probability that a judge, chosen randomly, will rule in favor of either the current norms (Player 1) or the proposed norms (Player 2) in a litigation.

In this case, we have p 1 = p 4 = 1, p 2 = p + (1 − p)q and p 3 = (1 − p) + pq. These values are then substituted into Equations (A11) and (A15):

(A16) x * = ( p 3 p 4 ) ( p 3 p 1 + p 2 p 4 ) = ( p 4 p 3 ) ( p 4 p 3 ) + ( p 1 p 2 ) = p

(A17) y * = ( 1 p 2 ) ( p 4 p 3 ) ( 1 p 2 ) ( p 4 p 3 ) + ( p 1 p 2 ) ( 1 p 3 ) = 1 2

This appendix provided a mathematical foundation for understanding how legal norms evolve within a common law system, highlighting the pivotal role of judicial preferences and litigation dynamics. This detailed derivation supports the main text’s findings, emphasizing the model’s implications for the evolution of legal efficiency.

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Received: 2023-12-23
Accepted: 2024-03-29
Published Online: 2024-04-11

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