TY  - JOUR
AU  - Gennaioli,Nicola
AU  - Shleifer,Andrei
TI  - Overruling and the Instability of Law
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12913
PY  - 2007
Y2  - February 2007
UR  - http://www.nber.org/papers/w12913
L1  - http://www.nber.org/papers/w12913.pdf
N1  - Author contact info:
Nicola Gennaioli
CREI
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 Barcelona (Spain)
E-Mail: ngennaioli@crei.cat

Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB  - 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.
ER  -