Litigation and the Evolution of Legal Remedies: A Dynamic Model

Abstract

In this paper we build upon existing literature on the evolution of the common law. We consider a model of legal evolution in which judges have varying ideologies and propensities to extend the domain of legal remedies and causes of action. Parties have symmetric stakes and are rational. Plaintiffs bring a case to court if the expected net return from the case is positive. The net expected value of the case depends on the objective merits of the case, the state of the law, and the ideological propensity of the judge. Plaintiffs have full control over whether to bring a case to court. In our model, the combined presence of differences in judges' ideology and plaintiff's case selection generate a monotonic upward trend in the evolution of legal rules and remedies. This may explain the stylized fact under which certain areas of the law have been granting increasing levels of remedial protection and recognition of plaintiffs' actions.

JEL Classification: K10, K41