Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86198
Authors: 
Dari-Mattiacci, Guiseppe
Deffains, Bruno
Year of Publication: 
2006
Series/Report no.: 
Tinbergen Institute Discussion Paper 06-071/1
Abstract: 
There is extensive literature on whether courts or legislators produce efficient rules, but which of them produces rules efficiently? The law is subject to uncertainty ex ante; uncertainty makes the outcomes of trials difficult to predict and deters parties from settling disputes out of court. In contrast, the law is certain ex post: litigation fosters the creation of precedents that reduce uncertainty. We postulate that there is a natural balance between the degree of uncertainty of a legal system (kept under control by litigation) and its litigation rate (sustained by uncertainty). We describe such equilibrium rates in a model of tort litigation, study how they are affected by different policies, and compare the costs and benefits of the legislative and the judicial process of lawmaking.
Subjects: 
incompleteness of law
complexity of law
litigation
judgemade law
legislation
JEL: 
K10
K40
K41
Document Type: 
Working Paper

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