Legal Precedent: A Theoretical and Empirical Analysis

William Landes () and Richard Posner

No 146, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The use of precedents to create rules of legal obligation has, to our knowledge, received little theoretical or empirical analysis. This paper presents and tests empirically an economic approach to legal precedent that is derived mainly from the analysis of capital formation and investment. We treat the body of legal precedents created by judicial decisions in prior periods as a capital stock that yields a flow of information services which depreciates over time as new conditions arise that were not foreseen by the framers of the existing precedents. New (and replacement) capital is created by investment in the production of precedents.

Date: 1976-08
Note: LE
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Published as Landes, William M. and Posner, Richard. "Legal Precedent: A Theoretical and Empirical Analysis." Journal of Law and Economics, (September 1976).

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