Judges become ambitious decision makers when they face appellate review. This paper applies a contract theoretic perspective to the behavior of self-interested trial judges in a twolevel court system and analyzes the consequences for contracting in “the shadow of” the court. Confronted with...

Judges are prone to error and misapprehension when they are verifying the facts of a legal case. We analyze the significance and scope of accurate court decisions and judicial error for labor contracting and identify the implications of these concepts on behavioral incentives and market...