Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2006-06-09 Number: 06-071/1 Author-Name: Guiseppe Dari-Mattiacci Author-Email: gdarimat@uva.nl Author-Workplace-Name: ACLE, Universiteit van Amsterdam, and George Mason University, Arlington, Virginia, USA Author-Name: Bruno Deffains Author-Email: bruno.deffains@univ-nancy2.fr Author-Workplace-Name: Université Nancy 2, BETA-CNRS, Nancy, France Title: Uncertainty of Law and the Legal Process Abstract: There is extensive literature on whether courts or legislators produce efficient rules, but which of them produces rules efficiently? The law is subject to uncertainty ex ante; uncertainty makes the outcomes of trials difficult to predict and deters parties from settling disputes out of court. In contrast, the law is certain ex post: litigation fosters the creation of precedents that reduce uncertainty. We postulate that there is a natural balance between the degree of uncertainty of a legal system (kept under control by litigation) and its litigation rate (sustained by uncertainty). We describe such equilibrium rates in a model of tort litigation, study how they are affected by different policies, and compare the costs and benefits of the legislative and the judicial process of lawmaking.

This discussion paper has resulted in a publication in the Journal of Institutional and Theoretical Economics, 2007, 163(4), 627-56. Classification-JEL: K10; K40; K41 Keywords: incompleteness of law; complexity of law; litigation; judgemade law; legislation File-Url: https://papers.tinbergen.nl/06071.pdf File-Format: application/pdf File-Size: 275551 bytes Handle: RePEc:tin:wpaper:20060071