Abstract

In his most recent article, “The Appeals Process as a Means of Error Correction,” Steven Shavell asks a very important question: Why do we use a hierarchical court structure? The flip side of this inquiry is whether we might not be better off simply making our trial courts more efficient. Although I certainly applaud the recent efforts of Shavell and other law and economics scholars to examine issues of institutional design, this particular attempt suffers from two major flaws. The first involves the asymmetric treatment of litigants before trial courts and appeals courts: Appellants can choose to either appeal cases or not, but the population of cases before the trial courts is assumed to be exogenous. This severely limits the ability to improve the efficiency of trial courts, leading to an overestimation of the value added from an appeals process. The second problem involves the behavior of judges, who are assumed to behave as automatons. Allowing judges to behave rationally dramatically changes the nature of the model's results, most fatally leading to the elimination of the separation equilibrium that Shavell wishes to achieve.