Overruling and the Instability of Law

Nicola Gennaioli () and Andrei Shleifer

No 12913, NBER Working Papers from National Bureau of Economic Research, Inc

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 U.S. 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.

JEL-codes: K13 K4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law, nep-pol and nep-upt
Date: 2007-02
Note: LE
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Journal Article: Overruling and the instability of law (2007)
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