No abstract

In the present paper we contribute to the previous literature on de facto enforcing mechanisms, by focusing on the role of judicial institutions and their performance and measurement. We propose both theoretical and empirical evidence supporting the necessity of a clear distinction between two measures of judicial performance, efficiency and efficacy, which have often been confused in previous literature. Not only might economic actors not be affected to the same extent by these two indicators, but we show that these measures do not even correlate significantly with each other. We also bring evidence against the alleged trade-off between the quality of justice and judicial performance in its quantitative dimension, showing that this relationship is much more complicated than is claimed by some legal scholars.

Although often assumed by economic theory, the idea of an efficient judicial system often sounds like an oxymoron. In this work, we suggest an innovative approach to investigating the determinants of court performance. Our focus is on determining the ideal institutional environment for fostering the appropriate set of incentives for judges to operate efficiently. In this setting, we find evidence that greater independence enjoyed by the judiciary from politics induces more competition among judges to obtain professional upgrades. Such an environment will incentivize ambitious individuals to be more efficient, thus positively affecting the aggregate performance of the judiciary.