Appellate lawmaking in a judicial hierarchy

We examine an infinite-horizon model of appellate court lawmaking. The model focuses on the impact of lawmaking on the behavior of trial courts, incorporating costly review of trial court dispositions by the appellate court. A successful audit by the appellate court provides an opportunity to create precedent. Precedent changes future trial court dispositions by providing new cases from which trial courts can draw analogies. This, in turn, alters the appellate court’s scrutiny of these dispositions—its audit strategy—going forward. We use the model to explain many features of actual judicial practice by courts in a hierarchy. Throughout, we relate the findings to existing evidence and derive testable predictions.