Rule Creation in a Political Hierarchy

Abstract

A considerable portion of the law is judge-made. Moreover, most law creation takes place in the judicial hierarchy, with the Supreme Court serving primarily as the overseer of the decisions made by lower courts. Despite the significance of the judicial hierarchy for law creation, there remain considerable gaps in our knowledge about the incentives and constraints facing lower court judges responsible for law creation. We model law creation in a judicial hierarchy characterized by principal-agent dilemmas. These models incorporate the empirical observations of previous research and outline a theoretical framework and testable predictions about the choices lower court judges will make when creating law. We also provide an empirical analysis of two of the model’s key predictions. While the paper is focused on courts, the implications of the analyses extend to other hierarchical rule-making structures.