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Delegation in a multi-tier court system: are remands in the U.S. federal courts driven by moral hazard?

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  • Sarel, Roee
  • Demirtas, Melanie
Abstract
We analyze the countervailing incentives that mid-level appellate judges face when deciding whether to remand a case back to the lower court. Although appellate courts' ability to remand cases can mitigate moral hazard problems, by restraining trial court judges, it may sometimes instead exacerbate such problems - by enabling the midlevel appellate judges to circumvent the top-level court's preferences through delegation. Our empirical assessment reveals a 'Subsequent Remand Effect': cases that are remanded by the Supreme Court to the appellate court are far more likely to be subsequently remanded again to the district court compared to other cases. We check whether this effect originates from legitimate case-relevant reasons or from moral hazard by exploiting variations in ideological distances between court levels and through a textual analysis. We find that the size of the effect varies with the composition of ideologies, which seems consistent with moral hazard.

Suggested Citation

  • Sarel, Roee & Demirtas, Melanie, 2019. "Delegation in a multi-tier court system: are remands in the U.S. federal courts driven by moral hazard?," ILE Working Paper Series 28, University of Hamburg, Institute of Law and Economics.
    • Handle: RePEc:zbw:ilewps:28
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    More about this item

    Keywords

    remands; federal courts; appeals; judicial ideology; ideological distance;
    All these keywords.

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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