Judges

1
Judges consistency the role of predictive
analysis

• Benito ARRUÑADA
• Pompeu Fabra University
• Workshop on Law Economics for European Law
• EALE University of Luxembourg
• Luxembourg, November 10, 2006

2
Judges consistency requires predictive analysis

• Benito ARRUÑADA
• Pompeu Fabra University
• Workshop on Law Economics for European Law
• EALE University of Luxembourg
• Luxembourg, November 10, 2006

3
Uncontroversial claim

• Judges need good analysis to use their discretion
  well

4
1. Which analysis is good?
5
Testable analyses are able to predict human
behavior

• Only predictive ability makes possible to compare
  choose between alternative analyses,
  identifying the best analysis
• Two consequences
• The economic adjective is misleading
• Even wrong e.g., evolutionary biology explains
  more for adoption and crime on children (Owen
  Jones works)
• Doubts on the value of legal positivism, in
  essence taxonomy
• Systematic analysis
• Analogy
• Authority

6
Doubts on legal positivism

• Does not predict behavior ? not testable,
  dogmatic
• Useful to guide judges fitting cases into the law
  ? Enough for judges applying good law (robot
  judges)But
• How to produce good law? (admittedly a question
  relevant for law-makers , not for robot judges)
• 19th century relied on analysis Law Econe.g.,
  property law
• 20th century? E.g., car dealers, payment delays
• (Arruñada et al, JLEO, 2001, 03 JLE 05 RLE
  05))
• Less adequate the greater the discretion of
  judges
• Greater in the Common Law
• judges traditionally decide according to rules of
  equity and nature of circumstances
• But increasing in many Civil Law jurisdictions

7
2. Why do judges need predictive analyses?
8
Judges need predictive analysis

• To achieve any of two possible standards when
  exercising their discretion
• Not only socially desirable or efficient
  decisions
• But merely decisions consistent with the judges
  objectives

9
The compassionate judge

• Worried for the poor, this judge uses her
  discretion to favor a poor party (e.g., a tenant)
• Is her decision consistent with her objectives?
• Obvious Little predictive analysis necessary
  to know that a poor party is now richer
• Not so She cared for the poor, not for a poor
• She needs predictive analyses to ascertain
  systemic consequences those for the millions of
  poor in society (i.e., no flats for rent)

10
3. Generalizing the argument
11
Necessary conditions for markets

• Efficient definition of the exchange
• Freedom of contract ex ante (contracting)
• Use of new information ex post (fulfillment)
• Enforcement
• Property rights
• Contractual agreements

i.e. using a broad concept of market, so that
it includes implicit human exchanges
12
How judges enable markets

• Efficient definition of the exchange
• PROTECT Freedom of contract ex ante
• EXPLOIT New information ex post
• Enforcement
• DEFINE PROTECT Property rights
• EXECUTE Contractual agreements

13
Examples of judicial failures

• Defining the exchange
• Wrongly improving on freedom of contract
• Hindsight biases in an uncertain exchange
• Jurisdictional failure ad nutum (at will)
  termination of car dealers (or even workers)
• Enforcement failures
• mortgages in Brazil, Lima, etc

14
Dominant feature of judicial failures
inconsistency b/w goals means

• An idea of justice for the case, for an
  individual in a class, within a contract
• Useful for judicial decisions with a mere
  taxonomic function within given law
• But insufficient for rulemaking judicial activity
  because it forgets about systemic consequences
• Because it precludes the same idea of justice
  (whatever good) for the whole class of
  individuals, especially through potential
  contracts that become nonviable

15
Conclusion

• The use of analyses predicting human behavior in
  a comparable manner is essential for judges to
  the extent that they enjoy discretion and they
  want to use it sensiblysensibly meaning
  consistently with their objectives, whatever
  these may be.

16
Judges consistency requires predictive analyses
Thank you for your attention