Tipping the Scales – Settlement, Appeal and the Relevance of Judicial Ambition

Christmann Robin ()
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Christmann Robin: Institute for Political Economics, Helmut-Schmidt University, Holstenhofweg 85, 22043 Hamburg, Germany

Review of Law & Economics, 2015, vol. 11, issue 2, 171-207

Abstract: Judges become ambitious decision makers when they face appellate review. This paper applies a contract theoretic perspective to the behavior of self-interested trial judges in a two-level court system and analyzes how different judicial stereotypes affect contracting in “the shadow of” the court. Confronted with the factual ambiguity of a case, maximizing judges pursue an (privately) optimal strategy and tip the scales of the trial outcome. The model reveals that careerist judges will deliberately allow for a certain probability of judicial error in their decisions to pursue “self-advertisement” at the appeal court. Furthermore, the strongest fact-finding judge is tempted by in-trial settlements to evade the risk of appellate review, and does not foster contract verifiability to the desirable extent. Our implications put into perspective the function of appellate courts to promote court accuracy. Additionally, a judicial tendency to conclude lawsuits through in-court settlements may strain contract output.

Keywords: court error; judicial agency; appellate review; contract theory (search for similar items in EconPapers)
JEL-codes: C72 K12 K41 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/rle-2015-0021

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