Endogenous legal traditions

• Published in: International review of law and economics Vol. 46; pp. 49 - 69
• Main Author: Guerriero, Carmine
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01-06-2016; Elsevier Science Ltd
• Subjects: Behavioral decision theory; Bias; Civil law; Common law; Criminal sentences; Culture; Economic development; Legal origins; Legal studies; Legislators; Political institutions; P16; K40; Z1; H11; Legal origins; Political institutions; Economic development; Culture; 010
• ISSN: 0144-8188; 1873-6394
• DOI: 10.1016/j.irle.2016.02.001

•The choice of the legal tradition is key issue in economics.•Under common law, appellate judges’ biases offset one another at the cost of volatility of the law.•Statutes are certain but biased when preferences are sufficiently heterogeneous and/or the political process is sufficiently inefficient.•Common law can be selected only if civil law is biased.•This prediction is consistent with novel data from 155 transplants, many of which reformed the transplanted legal tradition.
A key feature of a legal system is the set of institutions used to aggregate the citizens’ preferences over the harshness of punishment, i.e., the legal tradition. While under common law appellate judges’ biases offset one another at the cost of volatility of the law, under civil law the legislator chooses a certain legal rule that is biased only when he favors special interests, i.e., when preferences are sufficiently heterogeneous and/or the political process is sufficiently inefficient. Hence, common law can be selected only under this last scenario. This prediction is consistent with a novel dataset on the lawmaking and adjudication institutions in place at independence and in 2000 in 155 transplants, many of which reformed the transplanted legal tradition.