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Judicial Fact Discretion

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  • Gennaioli, Nicola
  • Shleifer, Andrei

Abstract

Following legal realists, we model the causes and consequences of trial judges exercising discretion in finding facts 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 the latter case, judges exercising fact discretion find the facts that fit the settled precedents, even when they have no policy preferences. In a standard model of a tort, judicial fact discretion leads to setting of damages unpredictable from true facts of the case but predictable from knowledge of judicial preferences, distorts the number and severity of accidents, and generates welfare losses. It also encourages litigants to take extreme positions in court and raises the incidence of litigation relative to settlement, especially in new and complex disputes for which the law is unsettled.

Suggested Citation

  • Gennaioli, Nicola & Shleifer, Andrei, 2008. "Judicial Fact Discretion," Scholarly Articles 3451304, Harvard University Department of Economics.
    • Handle: RePEc:hrv:faseco:3451304
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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