Endogenous Legal Traditions

A key feature of a legal system is the set of institutions used to aggregate the citizens’ preferences over the harshness of punishment, i.e., the legal tradition. While under common law appellate judges’ biases offset one another at the cost of volatility of the law, under civil law the legislator chooses a certain legal rule that is biased only when he favors special interests, i.e., when preferences are sufficiently heterogeneous and/or the political process is sufficiently inefficient. Hence, common law can be selected only under this last scenario. This prediction is consistent with a novel dataset on the lawmaking and adjudication institutions in place at independence and in 2000 in 155 transplants, many of which reformed the transplanted legal tradition.