Paper #768

Título:

Judges' cognition and market order

Autores:

Benito Arruñada y Veneta Andonova

Fecha:

Julio 2004

Resumen:

We argue that during the crystallization of common and civil law in the 19th century, the optimal degree of discretion in judicial rulemaking, albeit influenced by the comparative advantages of both legislative and judicial rulemaking, was mainly determined by the anti-market biases of the judiciary. The different degrees of judicial discretion adopted in both legal traditions were thus optimally adapted to different circumstances, mainly rooted in the unique, market-friendly, evolutionary transition enjoyed by English common law as opposed to the revolutionary environment of the civil law. On the Continent, constraining judicial discretion was essential for enforcing freedom of contract and establishing a market economy. The ongoing debasement of pro-market fundamentals in both branches of the Western legal system is explained from this perspective as a consequence of increased perceptions of exogenous risks and changes in the political system, which favored the adoption of sharing solutions and removed the cognitive advantage of parliaments and political leaders.

Palabras clave:

Legal systems, institutional development, law enforcement

Códigos JEL:

K40, N40, O10

Área de investigación:

Economía de la Empresa y Organización Industrial

Publicado en:

Review of Law and Economics, 4(2), 2008, 665-92

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