Reputation and Judicial Decision-Making

ECONOMIC MODELS of the common law have generally relied on rational behavior by litigants and invisible hand-type arguments to explain the evolution of the law [Rubin (1977) and Priest (1977)]. In these models, the behavior of the judges has been either ignored, or treated in an unsatisfactory or ad hoc manner. ¹ Similarly, recent interest among economists in the judicial practice of stare decisis, or decision by precedent, has focused on the efficiency of the practice without trying to explain why judges rationally follow it [Blume and Rubinfeld (1982), Heiner (1986), and Kornhauser (1989)]. This neglect of judicial motivation in models of the law is like explaining equilibrium in ordinary markets by modeling only the demand side and treating the supply side as exogenous. The model of the judicial decision-making developed in this paper represents an initial attempt to explicitly model the “supply” of legal precedents by seriously examining the incentives of judges.