The Information Dynamics of Vertical Stare Decisis

We propose a dynamic model of precedent in a judicial hierarchy which incorporates a “bottom-up” informational component. When a high court establishes precedents it has uncertainty regarding how these precedents will play out when applied to future legal disputes. Lower court implementation of these precedents can inform the high court about the contemporary policy implications of the precedent. If lower court usage of a precedent is informative, the high court will consider the revealed location of the precedent when contemplating reducing the precedent’s authority and applicability to future cases. Using data on U.S. Supreme Court precedents and U.S. Courts of Appeals citations to these precedents, we estimate a model of the Court’s negative treatment of precedent. We find that lower court usage of precedent can provide new, useful information on the policy content of a precedent, helping the Court in shape law in a way consistent with its preferences.