Common Law and Civil Law as Pro-Market Adaptations
Pompeu Fabra University
Universidad de los Andes, Colombia
June 30, 2008
Washington University Journal of Law & Policy, 26, pp. 81-130, 2008
UPF Economics and Business Working Paper Series No. 1098
We argue that in the development of the Western legal system, cognitive departures are the main determinant of the optimal degree of judicial rule-making. Judicial discretion, seen here as the main distinguishing feature between both legal systems, is introduced in civil law jurisdictions to protect, rather than to limit, freedom of contract against potential judicial backlash. Such protection was unnecessary in common law countries, where free-market relations enjoyed safer judicial ground mainly due to their relatively gradual evolution, their reliance on practitioners as judges, and the earlier development of institutional checks and balances that supported private property rights. In our framework, differences in costs and benefits associated with self-interest and lack of information require a cognitive failure to be active.
Number of Pages in PDF File: 35
Keywords: Legal systems, judiciary, institutional development, behavior, enforcement
JEL Classification: K40, N40, O10
Date posted: July 4, 2008 ; Last revised: August 1, 2011
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