Judicial review timing and legislative posturing: Reconsidering the moral hazard problem

The prospect of judicial review may cause legislators to adjust their behavior to anticipate the court’s response. This can serve as a source of moral hazard for legislators. Legislators can pursue irresponsible policies that are potentially electorally valuable and then rely on the court to bail them out by overturning the policy before implementation. We examine this issue by extending a seminal model of judicial review to include review both before the implementation of policy (ex ante review) and after the implementation of policy (ex post review). Our analysis shows that the moral hazard concerns are reduced when review occurs after policy costs are realized because politicians self-discipline. However, the full welfare implications for voters are complex, and each form of review has advantages.