Learning while setting precedents

Arbeitspapier

A decision maker makes a ruling on a random case in each period. She is uncertain about the correct ruling until conducting a costly investigation. A ruling establishes a precedent, which cannot be violated under binding precedent. We compare the information acquisition incentives, the evolution of standards and the social welfare under nonbinding and binding precedents. Compared to non-binding precedent, under binding precedent, information acquisition incentives are stronger in earlier periods, but become weaker as more precedents are established. Although erroneous rulings may be perpetuated under binding precedent, welfare can be higher because of the more intensive investigation early on.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 1092

Classification and Topics

• Classification: Wirtschaft ; Institutions: Design, Formation, Operations, and Impact ; Organizational Behavior; Transaction Costs; Property Rights ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: precedent ; binding precedent ; information acquisition ; transparency

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chen, Ying ; Eraslan, Hülya
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/230496
• Last update: 10.03.2025, 11:42 AM CET