Nuno Garoupa Copyright (c) 2012 All rights reserved. http://works.bepress.com/nunogaroupa Recent documents in Nuno Garoupa en-us Fri, 20 Jan 2012 01:50:25 PST 3600 Judicial Ideal Points in New Democracies: The Case of Taiwan http://works.bepress.com/nunogaroupa/65 http://works.bepress.com/nunogaroupa/65 Wed, 18 Jan 2012 08:06:12 PST This paper extends the empirical analysis of the determinants of judicial behavior by estimating the ideal points for the Justices of the Taiwanese Constitutional Court from 1988–2009. Taiwan presents a particularly interesting case because the establishment and development of constitutional review corresponds to the country’s political transition from an authoritarian regime dominated by one party to an emerging democracy. The estimated ideal points allow us to focus on political coalitions in the Judicial Yuan based on presidential appointments. We did not find any strong evidence of such coalitions. Our empirical results indicated that, with the exception of a handful of Justices, most of them have moderate estimated ideal points. In the context of the Taiwanese Constitutional Court, our results also confirm the previous econometric analysis that largely rejected the attitudinal hypothesis, which predicted that Justices would respond to their appointers’ party interests.

]]> Lucia Dallapellegrina et al. Comparative Law and Economics Why Not Adopt a Loser-Pays-All Rule in Criminal Litigation? http://works.bepress.com/nunogaroupa/64 http://works.bepress.com/nunogaroupa/64 Wed, 18 Jan 2012 07:36:17 PST In this paper we consider the potential effects that the application of a loser-pays-all rule may have on criminal litigation, including the decision to prosecute, criminal deterrence and legal error. We find that the effects of fee shifting on deterrence and on miscarriage of justice go in opposite directions. We also look at the effects of this rule on the rate of settlements (plea-bargaining) and when one party is wealth-constrained. We apply the insights of our model to current policy discussions such as the use of RICO proceedings and the financing of enforcement authorities in the United States.

]]> Nuno Garoupa et al. Criminal Law and Procedure The Fable of the Codes: The Efficiency of the Common Law, Legal Origins & Codification Movements http://works.bepress.com/nunogaroupa/62 http://works.bepress.com/nunogaroupa/62 Thu, 08 Sep 2011 17:09:23 PDT The superior efficiency of the common law has long been a staple of the law and economics literature. Generalizing from this claim, the legal origins literature uses cross-country empirical research to attempt to demonstrate this superiority by examining economic growth rates and the presence of common law legal systems. We argue that this literature fails to adequately characterize the relevant legal variables and that its reliance on broad-brush labels like “common law” and “civil law” is inappropriate.

In this Article, we first examine the efficiency literature’s claims about the common law and find that it fails to accurately account for important distinctions across common law legal systems and under-specifies key terms. We next turn to the lengthy debate over replacing the common law with a civil code that raged across the nineteenth century United States, drawing from the arguments of the participants the key factors that promote efficient outcomes. We conclude that a focus on legal systems’ ability to cheaply identify efficient rules, restrain rent-seeking in the formulation and application of rules, adapt rules to changed conditions, reveal the law to those affected by it, and enable contracting around inefficient rules would be more appropriate than the current emphasis on labels. Further, more attention to transition costs would make efforts at reform more credible.

]]> Nuno Garoupa et al. Comparative Law and Economics The Efficiency of the Common Law: The Puzzle of Mixed Legal Families http://works.bepress.com/nunogaroupa/61 http://works.bepress.com/nunogaroupa/61 Thu, 25 Aug 2011 07:05:46 PDT Many legal economists have suggested that the common law system is more conducive to economic growth than the civil law system. Such literature has been popularized within the legal origins movement. From the perspective of such literature, the existence of hybrid, pluralist or mixed legal jurisdictions is a puzzle. Why has civil law persisted while common law is more efficient?

This paper discusses the efficiency of the common law hypothesis from the perspective of hybrid jurisdictions. We argue that the complexities of legal systems require a more nuanced analysis. The consequence is that there is no single efficient outcome, thus undermining the “one-size-fits-all” theory of the legal origins literature.

]]> Nuno Garoupa et al. Comparative Law and Economics Does Immigration Cause Crime? Evidence from Spain http://works.bepress.com/nunogaroupa/60 http://works.bepress.com/nunogaroupa/60 Tue, 16 Aug 2011 01:40:53 PDT The relationship between crime and immigration has been a matter of controversy in the US and around the world. This paper investigates empirically the case of Spain. From 1999 to 2009, Spain has had a large wave of immigration from different areas of the globe. At the same time, crime rates have increased. However, by comparison with other European countries that have received similar massive immigration waves during the same period, crime rates in Spain have increased less considerably. We show that there is a significant relationship between crime and immigration. Nevertheless, the explanation is found in the specific characteristics of the different immigration groups, particularly in the amount and type of human capital, which is a result largely in tune with previous studies on US immigration and crime.

]]> César Alonso-Borrego et al. Criminal Law and Procedure Hybrid Judicial Career Structures: Reputation v Legal Tradition http://works.bepress.com/nunogaroupa/59 http://works.bepress.com/nunogaroupa/59 Thu, 28 Jul 2011 09:08:56 PDT Scholars have distinguished career from recognition judiciaries, largely arguing that they reflect different legal cultures and traditions. We start by noting that the career/recognition distinction does not correspond perfectly to the civil law/common law distinction, but rather that there are pockets of each institutional structure within regimes that are dominated by the other type. We discuss the causes and implications of this phenomenon, arguing that institutional structure is better explained through a theory of judicial reputation/legitimacy than through a theory of legal origin or tradition. We provide some preliminary empirical support for our account.

]]> Nuno Garoupa et al. Comparative Law and Economics Judging Under Political Pressure: An Empirical Analysis of Constitutional Review Voting in the Spanish Constitutional Court http://works.bepress.com/nunogaroupa/58 http://works.bepress.com/nunogaroupa/58 Tue, 19 Apr 2011 08:24:21 PDT In this paper we study the extent to which decisions by the Spanish Constitutional Court are explained by political variables. Our theory proposes that party alignment should play an important role in explaining the behavior of the Spanish constitutional judges, but with some limitations given the institutional constraints faced by the court. Therefore, we do not propose pure party alignment but a more sophisticated strategy approach based on the interaction between the advancement of ideological goals with the limitations imposed essentially by the civil law tradition of consensual courts. Using a unique dataset of abstract review cases in 1980-2006, we conclude that the patterns of political influence in the Spanish Constitutional Court are complex and cannot be easily framed merely as the pure reflection of the attitudinal model, and of left/right alignment.

]]> Nuno Garoupa et al. Comparative Law and Economics The Law and Economics of Legal Parochialism http://works.bepress.com/nunogaroupa/57 http://works.bepress.com/nunogaroupa/57 Tue, 12 Apr 2011 03:26:27 PDT Law and economics is influential in American legal scholarship, but not as much elsewhere. Different explanations have been suggested for this. In this Article, I argue that the problems faced by law and economics outside of the United States are neither particular to the field nor to the local context. I offer an interpretation based on the similarities between legal parochialism and trade protectionism. A tentative prediction is that globalization in legal markets might change the current patterns.

]]> Nuno Garoupa Comparative Law and Economics Scope of Liability, The Vanishing Distinction between Negligence and Strict Liability http://works.bepress.com/nunogaroupa/55 http://works.bepress.com/nunogaroupa/55 Wed, 30 Mar 2011 07:16:07 PDT Duty of care cannot be used anymore as the touchstone to differentiate negligence from strict liability, because the scope of liability (traditionally called proximate causation) requirement replicates many of the former features. Indeed, under a negligence rule the marginal Hand formula is applied twice: first to assess whether the defendant did breach his or her duty of care, and, second, to delimit whether defendant's behavior was a proximate cause of the harm suffered by the victim. But under a strict liability rule, the Hand formula question is applied only once when the proximate causation question is raised. Traditional law and economics analysis has almost always taken normative questions raised by the causation requirement as given, which is a major flaw of mainstream models, because the centrality of the scope of liability or proximate causation requirement in real legal practice is disregarded if not simply expelled from the analysis. Then, definining the subjective scope of liability, that is to say, the boundaries of the pool of potential defendants, is the basic policy decision in each an every liability rule. In the model presented in this paper, the government first chooses efficient scope of liability, and, second, given the scope of liability, the government decides liability rule and damages that guarantee efficient precaution. In the final part of the article, most known scope of liability doctrines developed by both common law and civil law systems are described in order to show how large the common ground between negligene and strict liability can be.

]]> Pablo Salvador-Coderch et al. REPUTATION AND HONESTY IN A MARKET FOR INFORMATION http://works.bepress.com/nunogaroupa/53 http://works.bepress.com/nunogaroupa/53 Wed, 30 Mar 2011 07:16:04 PDT Previous works on asymmetric information in asset markets tend to focus on the potential gains in the asset market itself. We focus on the market for information and conduct an experimental study to explore, in a game of finite but uncertain duration, whether reputation can be an effective constraint on deliberate misinformation. At the beginning of each period, an uninformed potential asset buyer can purchase information, at a fixed price and from a fully-informed source, about the value of the asset in that period. The informational insiders cannot purchase the asset and are given short-term incentives to provide false information when the asset value is low. Our model predicts that, in accordance with the Folk Theorem, Pareto-superior outcomes featuring truthful revelation should be sustainable. However, this depends critically on beliefs about rationality and behavior. We find that, overall, sellers are truthful 89% of the time. More significantly, the observed frequency of truthfulness is 81% when the asset value is low. Our result is consistent with both mixedstrategy and trigger strategy interpretations and provides evidence that most subjects correctly anticipate rational behavior. We discuss applications to financial markets, media regulation, and the stability of cartels.

]]> Gary B. Charness et al. The Economics of Judicial Councils http://works.bepress.com/nunogaroupa/51 http://works.bepress.com/nunogaroupa/51 Wed, 30 Mar 2011 07:16:00 PDT In recent decades, many countries around the world have institutionalized judicial councils of some sort. These institutions are designed to maintain an appropriate balance between judicial independence and accountability. However, they differ in attributes and competences across the world. Our paper has two aims. First, we provide an economic theory of the formation of judicial councils and identify some of the dimensions along which they differ. Second, we test the extent to which different designs of judicial council affect judicial quality. We find that there is little relationship between councils and quality. We also offer a positive explanation for why judicial councils nevertheless remain attractive institutions. Finally, we discuss several experiences from the perspective of our theory.

]]> Nuno Garoupa et al. Judicial Independence and Party Politics in the Kelsenian Constitutional Courts: The Case of Portugal http://works.bepress.com/nunogaroupa/45 http://works.bepress.com/nunogaroupa/45 Wed, 30 Mar 2011 07:15:47 PDT In this paper we test to what extent the Kelsenian-type of constitutional judges are independent from political parties by studying of the Portuguese Constitutional Court. The results yield three main conclusions. First, constitutional judges in Portugal are quite sensitive to their political affiliations and their political party's presence in government when voting. Second, peer pressure is very relevant. Third, the 1997 reform that was enacted to increase judicial independence has had no robust statistically significant effect.

]]> Sofia AmaralGarcia et al. Law and Economics Scope of Liability, The Vanishing Distinction between Negligence and Strict Liability http://works.bepress.com/nunogaroupa/42 http://works.bepress.com/nunogaroupa/42 Wed, 30 Mar 2011 07:15:41 PDT Duty of care cannot be used anymore as the touchstone to differentiate negligence from strict liability, because the scope of liability (traditionally called proximate causation) requirement replicates many of the former features. Indeed, under a negligence rule the marginal Hand formula is applied twice: first to assess whether the defendant did breach his or her duty of care, and, second, to delimit whether defendant's behavior was a proximate cause of the harm suffered by the victim. But under a strict liability rule, the Hand formula question is applied only once when the proximate causation question is raised. Traditional law and economics analysis has almost always taken normative questions raised by the causation requirement as given, which is a major flaw of mainstream models, because the centrality of the scope of liability or proximate causation requirement in real legal practice is disregarded if not simply expelled from the analysis. Then, definining the subjective scope of liability, that is to say, the boundaries of the pool of potential defendants, is the basic policy decision in each an every liability rule. In the model presented in this paper, the government first chooses efficient scope of liability, and, second, given the scope of liability, the government decides liability rule and damages that guarantee efficient precaution. In the final part of the article, most known scope of liability doctrines developed by both common law and civil law systems are described in order to show how large the common ground between negligene and strict liability can be.

]]> Pablo Salvador Coderch et al. Torts The Unsolvable Dilemma of a Paretian Policymaker http://works.bepress.com/nunogaroupa/41 http://works.bepress.com/nunogaroupa/41 Wed, 30 Mar 2011 07:15:40 PDT In this paper, we argue that social decisionmaking is subject to a fundamental conflict between consistency and completeness. We show that a consistent welfarist method of policy assessment, that is, one that never violates the Pareto principle, may be incomplete in the sense of being incapable of providing a solution to important social welfare problems.

]]> Giuseppe Dari-Mattiacci et al. Economics Law and Economics The Virtuous Circle of Distrust: A Mechanism to Deter Bribes and Other Cooperative Crimes http://works.bepress.com/nunogaroupa/39 http://works.bepress.com/nunogaroupa/39 Wed, 30 Mar 2011 07:15:35 PDT Some crimes involve the cooperation of two or more criminals for mutual gain. Instead of deterring these crimes, the state can prevent them by creating distrust among criminals. The state should offer amnesty and a bounty to the criminal who first secures punishment of the other participant in a cooperative crime. We especially focus on bribes, which occur when someone pays an agent to violate a duty owed to the principal. To prevent bribes, the principal offers amnesty and a bounty to the debtor or agent who secures the other party’s punishment. Under certain conditions, the game’s equilibrium changes from cooperation to non-cooperation (prisoner’s dilemma), so bribes disappear.

]]> Robert Cooter et al. The Evolution of the Common Law and Efficiency http://works.bepress.com/nunogaroupa/56 http://works.bepress.com/nunogaroupa/56 Wed, 30 Mar 2011 07:14:04 PDT The efficiency of the common law hypothesis has generated a large bulk of literature in the last decades. The main argument is that there is an implicit economic logic to the common law; the doctrines in common law provide a coherent and consistent system of incentives which induce efficient behavior. We start by observing that if the common law is overall evolutionarily efficient, we are left with no explanation for the important doctrinal differences across common law jurisdictions. The observation is more striking if we keep in mind that presumably the de jure initial condition was the same, namely English law. This paper assesses the efficiency of the common law hypothesis to detect the possible explanations for those main differences. If local determinants shape the common law differently, the literature needs to address these particularities that have been largely ignored. The consequence is that there is probably no single efficient outcome, thus undermining the “one-size-fits-all” theory of the legal origins literature.

]]> Nuno Garoupa et al. Comparative Law and Economics Building Reputation in Constitutional Courts: Party and Judicial Politics http://works.bepress.com/nunogaroupa/38 http://works.bepress.com/nunogaroupa/38 Fri, 25 Mar 2011 14:42:50 PDT This paper explains how specialized constitutional courts navigate between the demands of two different external audiences, the political and the judicial. The political audience expects constitutional court judges to respond to political pressures and to vote ideologically. Such voting, however, might undermine the constitutional court’s ability to influence the judicial audience, which necessarily views cases as apolitical in character. We argue that the need to achieve supremacy over other higher courts constrains the ability of constitutional judges to pursue ideological goals. We examine patterns of consensus and fragmentation to demonstrate our proposition. We find empirical evidence that the existence of conflict between supreme and constitutional courts is positively related to the stability of court majorities.

]]> Nuno Garoupa et al. Comparative Law and Economics The Brady Rule May Hurt the Innocent http://works.bepress.com/nunogaroupa/37 http://works.bepress.com/nunogaroupa/37 Mon, 27 Sep 2010 18:00:00 PDT Mandatory disclosure of evidence (the so-called Brady rule) is considered to be among the most important bulwarks against prosecutorial misconduct. While protecting the generality of defendants in the criminal process, we show that under certain reasonable assumptions, this procedural mechanism may hurt innocent defendants by inducing prosecutors to adjust their behavior to their detriment. The main rationale for our thesis is that, if forced to reveal exculpatory information, the prosecutor might not look for that information in the first place, and in turn this could harm the innocent under certain reasonable conditions. We extensively discuss our results in the context of the economic literature on criminal procedure.

]]> Nuno Garoupa et al. Criminal Law and Procedure The Syndrome of the Efficiency of the Common Law http://works.bepress.com/nunogaroupa/36 http://works.bepress.com/nunogaroupa/36 Tue, 07 Sep 2010 20:13:13 PDT Our paper is a methodological critique of the recent legal origins literature. We start by showing that the legal origins cannot be easily based on the efficiency hypothesis of the common law. By debunking the relationship between the efficiency hypothesis of the common law and the legal origins literature, we are left with no consistent theory to explain the alleged inferiority of French civil law.

It is clear that the legal origins literature is based on a particular biased selection of “cherry-picked” legal doctrines. A different selection of “cherry-picked” legal doctrines produces a distinct assessment. We discuss examples that look at substantive law and procedure in the core areas of property, contracts and torts. These are the areas that have been documented to be crucial for economic growth. The second set of examples look at the organization of the legal system and governance. The influence of these variables on economic growth is more controversial, but they have been part of the argument against the efficiency of French civil law. We argue that a careful examination of rules and legal institutions shows that the inefficiency hypothesis of French law is not sustainable under the current framework of comparative law and economics.

Our goal is not to argue that French law is more efficient than common law. Our criticism is essentially methodological. Robust micro-based assessments of rules and legal institutions should prevail over macro generalizations and “cherry-picking” theories that lack a serious theoretical framework. The academic discussion concerning the efficiency superiority of the common law should not overcome the detailed study of legal institutions around the world. Successful legal reforms need to address local problems under local restrictions and specific determinants. In our view, legal reforms based on misperceptions and generalizations are actually detrimental.

]]> Nuno Garoupa et al. Comparative Law and Economics Efficiency of the Common Law The Investigation and Prosecution of Regulatory Offences: Is There an Economic Case for Integration? http://works.bepress.com/nunogaroupa/35 http://works.bepress.com/nunogaroupa/35 Fri, 03 Sep 2010 06:39:45 PDT The separation of investigation and prosecution is prevalent in the criminal justice system. The institutional design of regulatory law has been significantly different, since in general regulatory agencies exercise investigatory and prosecuting powers. We develop an economic framework to explain the decision whether to separate or integrate investigation and prosecution. Our results are relevant for the discussion of recent legal reforms in England and Wales, in particular the Regulatory Enforcement and Sanctions Act 2008.

]]> Nuno Garoupa et al. Criminal Law and Procedure