Judges, Out-Of-Court Rewards, and In-Court Behavior: Evidence From an Italian Legal Reform
DOI:
https://doi.org/10.62355/ejels.17638Keywords:
judicial behavior, monetary incentives, corruption, administrative justice, out-of-court arbitration, difference-in-differencesAbstract
We empirically assess how out-of-court monetary rewards influence related in-court judicial behavior. In Italy, before a legal reform, Council of State judges were chosen by big law firms to serve as arbitrators in out-of-court arbitrations involving big law firm clients. Drawing on case-level data on Council decisions and using a difference-in-differences approach, we establish three central findings. First, before the legal reform, and consistent with the argument that judges strove to compensate big law firms for afforded out-of-court earning opportunities, big law firms were more likely to win Council cases when those cases were presided over by judges with prior arbitration experience. Second, as a result of a 2010 announcement of an anticorruption law reform that banned judicial participation in arbitrations, big law firms’ winning prospects in Council cases presided by judges with prior arbitration experience decreased by 33.4 percentage points. Third, following the law’s enactment, the success rate of big law firms in these cases converged to the success rate of big law firms in analogous court cases presided by judges without prior arbitration experience. Our analysis provides evidence of the importance of extrinsic motives for judicial behavior.
References
Aney, Madhav S, Shubhankar Dam, and Giovanni Ko. 2021. ”Jobs for Justice(s): Corruption in the Supreme Court of India.” Journal of Law and Economics 64: 479–509. https://doi.org/10.1086/713728 DOI: https://doi.org/10.1086/713728
Ash, Elliott and W. Bentley MacLeod. 2015. “Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts.” Journal of Law and Economics 58(4): 863–913. https://doi.org/10.1086/684293 DOI: https://doi.org/10.1086/684293
Ashenfelter, Orley. 1987. “Arbitrator Behavior.” American Economic Review 77:342–346.
Ashenfelter, Orley and David E. Bloom. 1984. “Models of Arbitrator Behavior: Theory and Evidence.” American Economic Review 74(1): 111–124. DOI: https://doi.org/10.3386/w1149
Ashraf, Nava, Oriana Bandiera, B. Kelsey Jack. 2014. “No Margin, No Mission? A Field Experiment on Incentives for Public Service Delivery.” Journal of Public Economics 120: 1–17. https://doi.org/10.1016/j.jpubeco.2014.06.014 DOI: https://doi.org/10.1016/j.jpubeco.2014.06.014
Bagues, Manuel and Berta Esteve-Volart. 2014. “Performance Pay and Judicial Production: Evidence from Spain.” http://www.manuelbagues.com/bagues%20&%20esteve-volart%20-%20judges.pdf
Banuri, Sheheryar and Philip Keefer. 2015. “Was Weber Right? The Effects of Pay for Ability and Pay for Performance on Pro-Social Motivation, Ability and Effort in the Public Sector.” World Bank Policy Research, working-paper 7621. https://doi.org/10.1596/1813-9450-7261 DOI: https://doi.org/10.1596/1813-9450-7261
Bloom, David E. 1986. “Empirical Models of Arbitrator Behavior under Conventional Arbitration.” Review of Economics and Statistics 68: 578–585. DOI: https://doi.org/10.2307/1924516
Bloom, David E. and Christopher L. Cavanagh. 1986. “An Analysis of the Selection of Arbitrators.” American Economic Review 76(3): 408–422. DOI: https://doi.org/10.3386/w1938
Bray, Robert L., Decio Coviello, Andrea Ichino, and Nicola Persico. 2016. “Multitasking, Multiarmed Bandits, and the Italian Judiciary.” Manufacturing & Service Operations Management 18(4): 545–558. https://doi.org/10.1287/msom.2016.0586 DOI: https://doi.org/10.1287/msom.2016.0586
Coviello, Decio, Andrea Ichino, and Nicola Persico. 2019. “Measuring the Gains from Labor Specialization.” Journal of Law and Economics 62: 403–426. https://doi.org/10.1086/704244 DOI: https://doi.org/10.1086/704244
DeAngelo, Gregory and Bryan C. McCannon. 2017. “Judicial Compensation and Performance.” Supreme Court Economic Review 25: 129–147. https://doi.org/10.1086/699661 DOI: https://doi.org/10.1086/699661
de Clippel, Geoffroy, Kfir Eliaz, and Brian Knight. 2014. “On the Selection of Arbitrators.” American Economic Review 104(11): 3434–3458. https://doi.org/10.1257/aer.104.11.3434 DOI: https://doi.org/10.1257/aer.104.11.3434
de Figueiredo, Miguel F.P., Alexandra D. Lahav, and Peter Siegelman. 2020. “The Six-Month List and the Unintended Consequences of Judicial Accountability.” Cornell Law Review 105: 363–456.
Epstein, Lee and Jack Knight. 2013. “Reconsidering Judicial Preferences.” Annual Review of Political Science 16(1): 11–31. https://doi.org/10.1146/annurev-polisci-032211-214229 DOI: https://doi.org/10.1146/annurev-polisci-032211-214229
Frey, Bruno and Felix Oberholzer-Gee. 1997. “The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-out.” American Economic Review 87(4): 746–755.
Furlan, Federico. 2012. “Gli incarichi extragiudiziari dei magistrati amministrativi: problemi e prospettive.” Quaderni Costituzionali 11–13.
Garoupa, Nuno, Marian Gili, and Fernando Gómez-Pomar. 2012. “Political Influence and Career Judges: An Empirical Analysis of Administrative Review by the Spanish Supreme Court.” Journal of Empirical Legal Studies 9(4): 795–826. https://doi.org/10.1111/j.1740-1461.2012.01270.x DOI: https://doi.org/10.1111/j.1740-1461.2012.01270.x
Gneezy, Uri, Stephan Meier and Pedro Rey-Biel. 2011. “When and Why Incentives (Don’t) Work to Modify Behavior.” Journal of Economic Perspectives 25: 191–209. https://doi.org/10.1257/jep.25.4.191 DOI: https://doi.org/10.1257/jep.25.4.191
Hasnain, Zahid, Nick Manning, and Henryk Pierskalla. 2012. “Performance-related Pay in the Public Sector: A Review of Theory and Evidence.” World Bank Policy Research, working-paper 6043. DOI: https://doi.org/10.1596/1813-9450-6043
Heinrich Carolyn J. and Gerald Marschke. 2010. “Incentives and their Dynamics in Public Sector Performance Management Systems.” Journal of Policy Analysis and Management 29(1): 183–208. https://doi.org/10.1002/pam.20484 DOI: https://doi.org/10.1002/pam.20484
Ichino, Andrea, Michele Polo, and Enrico Rettore. 2003. “Are Judges Biased by Labor Market Conditions?” European Economic Review 47(5): 913–944. https://doi.org/10.1016/S0014-2921(02)00269-6 DOI: https://doi.org/10.1016/S0014-2921(02)00269-6
Jia, Ruixue, and Huihua Nie. 2017. “Decentralization, Collusion, and Coal Mine Deaths.” Review of Economics and Statistics 99 (1): 105–118. https://doi.org/10.1162/REST_a_00563 DOI: https://doi.org/10.1162/REST_a_00563
Kang, Michael S. and Joanna M. Shepherd. 2015. “Partisanship in State Supreme Courts: The Empirical Relationship between Party Campaign Contributions and Judicial Decision Making.” Journal of Legal Studies Volume 44(S1): S161–S185, https://www.journals.uchicago.edu/doi/10.1086/682690 DOI: https://doi.org/10.1086/682690
Klerman, Daniel. 2007. “Jurisdictional Competition and the Evolution of the Common Law.” University of Chicago Law Review 74: 1179–1226. DOI: https://doi.org/10.2307/20141860
Klerman, Daniel and Greg Reilly. 2016. “Forum Selling.” Southern California Law Review 89(2): 241–316.
Kreps, David M. 1997. “Intrinsic Motivation and Extrinsic Incentives.” American Economic Review 87: 359–364.
Posner, Richard. 1993. “What Do Judges and Justices Maximize? (The Same Thing Everybody Else)” Supreme Court Economic Review 3: 1–41. DOI: https://doi.org/10.1086/scer.3.1147064
Posner, Richard. 2005. “Judicial Behavior and Performance: An Economic Approach.” Florida State University Law Review 32: 1259–1279.
Posner, Richard. 2008. How Judges Think. Cambridge, MA: Harvard University Press.
Prendergast, Canice. 1999. “The Provision of Incentives in Firms.” Journal of Economic Perspectives 7: 7–63. https://doi.org/10.1257/jel.37.1.7 DOI: https://doi.org/10.1257/jel.37.1.7
Prendergast, Canice. 2007. “The Motivation and Bias of Bureaucrats.” American Economic Review 97: 180–196. https://doi.org/10.1257/aer.97.1.180 DOI: https://doi.org/10.1257/aer.97.1.180
Prendergast, Canice. 2008. “Intrinsic Motivation and Incentives.” American Economic Review 98: 201–205. https://doi.org/10.1257/aer.98.2.201 DOI: https://doi.org/10.1257/aer.98.2.201
Additional Files
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Lucia Dalla Pellegrina, Nuno Garoupa, Peter Grajzl
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
