Chilling or Learning?

Abstract

We exploit the nonhierarchical nature of the European Union legal system to investigate the effect of negative feedback on inter-court cooperation. We argue that, in the context of a nonhierarchical referral system, formal dismissals expose shirking which the principal, the referral court, has no formal power to curb. Yet, we find that when referring courts have experienced a formal dismissal, they are not only more likely to resubmit but are also more likely to see their references accepted. This effect increases with the number of formal dismissals previously experienced. Our findings suggest that referring courts expect significant benefits from cooperation which the referral court is able to leverage to ameliorate the quality of the referring judges' work.