The Common Law Process and the Selection of Efficient Rules
![handle is hein.journals/legstud6 and id is 69 raw text is: THE COMMON LAW PROCESS AND THE
SELECTION OF EFFICIENT RULES
GEORGE L. PRIEST*
THIS comment simplifies and extends the important insight of the preced-
ing paper by Paul H. Rubin. I I shall argue that the tendency of the set of all
legal rules to become dominated by rules achieving efficient as opposed to
inefficient allocative effects is substantially more pervasive than might be
thought. It will be shown that efficient rules will be more likely to endure as
controlling precedents regardless of the attitudes of individual judges toward
efficiency, the ability of judges to distinguish efficient from inefficient out-
comes, or the interest or uninterest of litigants in the allocative effects of the
rules. Furthermore, it will be shown that this tendency toward efficiency is a
characteristic of the common law process so that the content not only of the
common law itself, but also of the legal interpretation of statutes or of the
Constitution, is subject to forces pressing toward efficiency. The only as-
sumption necessary for the hypothesis is that transaction costs in the real
world are positive. It follows from this assumption that inefficient legal rules
will impose greater costs than efficient rules on the parties subject to them.
Since litigation is more likely than settlement where, ceteris paribus, the
stakes of a case are greater, disputes arising under inefficient rules will be
more likely to be relitigated than disputes arising under efficient rules.2 It
will be shown that, as a consequence, judges will be unable to influence the
content of the law to fully reflect their attitudes toward efficiency. The set of
legal rules will always contain a greater proportion of efficient rules than
judges themselves would prefer.
* Fellow in Law and Economics, University of Chicago Law School; Associate Professor of
Law (on leave), University of Puget Sound.
I am grateful to Gary S. Becker, Edmund W. Kitch, Anthony T. Kronman, William M.
Landes, B. Peter Pashigian, Wallace M. Rudolph, Robert Sherwin, Kenneth I. Wolpin and to
the participants of the Law and Economics Workshop of the University of Chicago Law School
for helpful comments on an earlier draft.
Paul H. Rubin, Why is the Common Law Efficient?, 6 J. Leg. Studies 51 (1977) [hereinafter
cited as Rubin].
2 For this conclusion it is necessary in addition to abstract from wealth effects on the con-
sumption of litigation. See note 20 infra.](ViewImageLocal?handle=hein.journals/legstud6&div=8&collection=&method=preview&ext=.png&size=3)
What Is HeinOnline?
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most
The Common Law Process and the Selection of Efficient Rules
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most