A Costly Signaling Theory of Hard Look Review

54 Pages Posted: 31 Jul 2006

See all articles by Matthew Stephenson

Matthew Stephenson

Harvard Law School; Institute for Corruption Studies

Date Written: February 2006

Abstract

Judges often review decisions made by government actors, such as agencies or legislatures, with greater expertise about the effects of different policy choices. One judicial response to this asymmetric information problem has been to shift the focus of review from a substantive evaluation of the policy to an assessment of the quality of the explanation the government offers in support of that choice. Proponents of this type of "hard look" review argue that it improves the quality of government decisions; critics charge that it imposes costs on government policymakers without providing useful information to reviewing courts. This paper offers an alternative perspective: Judicially-imposed explanation requirements can help reviewing courts overcome their informational disadvantage for reasons that are independent of their ability to assess the substantive content of government explanations. If producing impressive explanations is expensive, then the court can reason that the government's willingness to produce a high-quality explanation signals the government's belief that the proposed policy has large benefits. Furthermore, if the preferences of the court and government are positively correlated in expectation, then the fact that the government places a high value on the policy means the policy is more likely to be acceptable to the court. Therefore, judicial evaluation of explanation quality ameliorates the court's informational disadvantage, and may induce a court to uphold a government decision it would otherwise invalidate. The paper develops this costly signaling perspective on hard look review in the administrative law context, and then considers other applications in constitutional and criminal law.

JEL Classification: D73, D82, H83, K23, K32, K40

Suggested Citation

Stephenson, Matthew Caleb, A Costly Signaling Theory of Hard Look Review (February 2006). Harvard Law and Economics Discussion Paper No. 539, Available at SSRN: https://ssrn.com/abstract=921421 or http://dx.doi.org/10.2139/ssrn.921421

Matthew Caleb Stephenson (Contact Author)

Harvard Law School ( email )

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Institute for Corruption Studies

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