Judicial Hierarchies and the Rule-Individual Tradeoff

We analyze decision-making in a simple model of the judicial hierarchy. We assume that trial court judges are more concerned with ex post efficiency with respect to the individuals involved in the cases at hand, and less concerned with ex ante efficiency with respect to the precedents established for society, than are appeals court judges. This implies that the preferred decisions of appeals court judges differ systematically from those of trial court judges. Appeals court judges can enforce their preferred decisions by reversing those of the trial court judges. However, in the model, litigants do not always appeal decisions that would be reversed, both because appeals are costly and because the outcome is uncertain. Consequently, appeals court judges may prefer to enact higher level rules that reduce the discretion of all judges