Endogenous Appeals

What role to litigants play in the resolution of legal disputes? One view is that they have private information about the state of the world and signal (via costly actions) that their case has merit. Another, less common view is that they acquire information that helps judges make decisions. The main lesson of this research is that litigants are important for helping judges and courts make more informed decisions. While this may be true, there is an overlooked downside of litigant-driven appeals. The model in this paper shows that a decision maker may purposefully make outcomes worse in order to prevent having their decisions overturned. The model features judges who are “legalists” and thus wish to adjudicate cases correctly and and in an unbiased manner. Even so, I show how endogenous appeals by losing litigants can incentivize trial judge to ignore her own information about which litigant should prevail on the merits of a case. Such inefficient equilibria should be common when litigants are relatively good at mounting strong appeals, thus undercutting the widely acknowledged benefits of advocacy.