The Economics of Courts and Litigation
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The Economics of Courts and Litigation

Francisco Cabrillo and Sean Fitzpatrick

Dissatisfaction with the working of courts is ubiquitous. Legal inertia and maladministration are the norm in many countries and have significant social and economic repercussions. No longer a theme relegated to the peripheries of economic analysis, the administration of justice is now recognised by most economists as being of fundamental importance for economic development, a factor increasingly being acknowledged by policymakers at all levels. The departure point for this book is the authors’ belief in the need for a systematic analysis of the incentive structures facing key players in the courts and litigation process. They focus not only on structures pertaining to the common law tradition, but offer analysis of issues not normally found in the North-American literature, such as the Latin notary and the selection and values of judges in civil law systems. They further propose an ample list of considerations for a reform agenda.
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Chapter 3: Judges

Francisco Cabrillo and Sean Fitzpatrick


1. INTRODUCTION This chapter is dedicated to the analysis of judges, the central figures in the administration of justice. From an economic perspective, the reasons behind judges’ behaviour are more enigmatic than for either political actors or those engaged in the private sector. Conditions of judicial appointment are frequently designed to curb motivational factors common to practically all types of employment found in the market. Traditional tools of public administration, such as the carrot and the stick, are less available to influence judges’ behaviour, the obvious reason for which being judicial independence.1 It would be foolhardy to assume that judges are purely motivated by social welfare maximization considerations. Several factors influence the way in which judges’ work is performed, but the factors that sway judicial behaviour are less straightforward than for other economic agents. Judges still respond to incentives, though, by design, the number and nature of these incentives may be limited. We shall see that the effects of changes in remuneration are ambiguous. Increasing judicial salaries does not generally lead to an increase in effort, given that productivity is not tied to effort. A judge who values leisure time highly may even have greater incentives following a pay rise to reduce his effort level. On the other hand, it may lead to better candidates entering the judiciary. Moreover, where there is a substantial difference between rewards for first instance, second instance and third instance judges, the more monetary-minded judge may also have incentives to increase his efforts in order...

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