Judicial Predictability and Federal Stability

Abstract

Institutions structure incentive environments for strategic actors. What is the effect of a flawed institution - one that is not perfectly predictable - on strategic behavior? This paper focuses on the influence of the judiciary on inter-governmental rivalry in a federation, in particular considering how shifts in judicial predictability affect federal opportunism. Results of the model indicate that governments in a federation challenge one another’s behavior in court less frequently as the judiciary grows more predictable but the effect of predictability on opportunism depends upon the cost of challenging an agent. When costs are low, increasing the predictability of the court increases opportunism, contrary to intuition. The model is extended to consider the effect of a biased court.