Judicial Fact Discretion

Abstract

Judicial fact discretion is defined as misrepresentation in a judge's decision of facts revealed in a trial. We identify two motivations for the exercise of such discretion: judicial policy preferences and judges' aversion to reversal on appeal when the law is unsettled. In a standard model of a tort, we show that judicial fact discretion leads to distorted incentives for taking precautions, excessive levels of bad accidents, trial outcomes unpredictable from true facts of the case, and welfare losses. It also raises the incidence of litigation relative to settlement, and encourages litigants to take extreme positions in court. The model makes plausible predictions as to when common law trials will work poorly, and points to legal rules limiting distortions from judicial fact discretion.

Getting Their Way: Bias and Deference to Trial Courts

“…The model in this article is most closely related to two recent articles. In Gennaioli and Shleifer (2008), deference to a trial court occurs because it is implicitly assumed that an appellate court can commit to defer to a trial judge's fact finding. Since an appellate court's review occurs ex post, what is missing from that account is an explanation for why the appellate court defers when it fully understands that the trial judge has an incentive to engage in fact distortion.…”

Judges as satisficers: a law and economics perspective on judicial liability

“…Third, it is often not 9 See esp. Gennaioli and Shleifer (2006) who construct a model for judicial fact discretion, defined as misrepresentation in a judge's decision of facts revealed in a trial. 10 Simon describes the principle of ''bounded rationality'' as follows: ''The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world-or even for a reasonable approximation to such objective rationality'' (Simon 1957: 198).…”

Optimal Contracts With Enforcement Risk

“…The model of biased adjudication presented here has already been used to shed new light on a variety of issues beyond contract design. Some of the research has delved into such classical law and economic topics as common law evolution (Gennaioli and Shleifer 2007;Ponzetto and Fernandez 2008), enforcement of legal rules (Gennaioli and Shleifer 2008), and regulation (Shleifer 2010). With biased courts, not only do torts and legal evolution work differently but also the properties of different interventions against market failures are affected, since the Coase theorem no longer holds.…”