A New Angle on Rules Versus Standards

27 Pages Posted: 7 Sep 2011

See all articles by Ezra Friedman

Ezra Friedman

Northwestern University - Pritzker School of Law

Abraham L. Wickelgren

University of Texas at Austin - School of Law; University of Texas at Austin - Center for Law, Business, and Economics

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Date Written: September 7, 2011

Abstract

The debate over standards versus rules has been framed as a trade-off between the certainty and lower administrative costs of rules versus the greater flexibility to base decisions on case-specific evidence with standards. In this paper, we argue that even if judges have no ability to directly assess case-specific evidence, standards may create a desirable signaling effect that improves the judge’s decision. Even when judges cannot directly observe the merits of the case, if they are not bound by rigid rules, they are more likely to base their decision on the quality of legal representation. When the ex-post effects of the decision matter, and when the decision only affects the parties to the law suit, the party that desires the efficient decision has the most to gain, and would be expected to exert the most effort. As a result, this party would be more likely to prevail under a standards based system. We argue that this effect can be a strong argument in favor of a standards based system.

Suggested Citation

Friedman, Ezra and Wickelgren, Abraham L., A New Angle on Rules Versus Standards (September 7, 2011). U of Texas Law, Law and Econ Research Paper No. 212. Available at SSRN: https://ssrn.com/abstract=1923720 or http://dx.doi.org/10.2139/ssrn.1923720

Ezra Friedman

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

Abraham L. Wickelgren (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Center for Law, Business, and Economics

Austin, TX 78712
United States

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