The Role of Status Quo Bias and Bayesian Learning in the Creation of New Legal Rights

Journal of Law, Economics, and Policy, 2006

Minnesota Legal Studies Research Paper No. 07-10

29 Pages Posted: 20 Apr 2007

See all articles by Francesco Parisi

Francesco Parisi

University of Minnesota - Law School; University of Bologna; University of Miami, School of Law

Robert L. Scharff

Ohio State University - Department of Consumer Sciences

Abstract

We consider the role of status quo bias and Bayesian learning on the creation of new legal rights utilizing a model of legal evolution in which judges have limited discretion to create new precedent based on personal values, but, in the long run, are constrained by efficiency criteria. Our model demonstrates that status quo bias may effectively transform an ex ante inefficient rule into an ex post efficient rule. Because these legal rights are internalized over time through a process of Bayesian learning, new precedent is vulnerable to reversal until the new right has been sufficiently recognized and accepted.

Keywords: Status quo bias, Bayesian Learning, Legal Evolution, Legal Rights

JEL Classification: K10, K41

Suggested Citation

Parisi, Francesco and Scharff, Robert L., The Role of Status Quo Bias and Bayesian Learning in the Creation of New Legal Rights. Journal of Law, Economics, and Policy, 2006, Minnesota Legal Studies Research Paper No. 07-10, Available at SSRN: https://ssrn.com/abstract=981250

Francesco Parisi (Contact Author)

University of Minnesota - Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

University of Bologna ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

University of Miami, School of Law ( email )

Robert L. Scharff

Ohio State University - Department of Consumer Sciences ( email )

Columbus, OH 43210
United States
614-292-4549 (Phone)

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