Stare Decisis and Judicial Log-Rolls: A Gains-from-Trade Model

The practice of horizontal stare decisis requires that judges occasionally decide cases ‘incorrectly’. What sustains this practice? Given a heterogeneous bench, we show that the increasing differences in dispositional value property of preferences generates gains when judges trade dispositions over the case space. These gains are fully realized by
implementing a compromise rule – stare decisis. Absent commitment, we provide conditions that sustain the compromise in a repeated game. When complete compromises become unsustainable, partial compromises still avail. Moreover, judges may prefer to implement partial compromises even when perfect ones are sustainable. Thus, stare decisis is consistent with a partially-settled, partially-contested legal doctrine.