Delegation in a multi-tier court system: Are remands in the U.S. federal courts driven by moral hazard?

Appellate judges face a trade-off when deciding whether to remand cases: delegating the decision power enables to transfer effort costs to the lower court, but may be costly in terms of ideological preferences and reputation costs. Our empirical analysis of federal cases reveals that this trade-off creates a ‘Subsequent Remand Effect’: cases remanded by the Supreme Court to appellate courts are far more likely to be subsequently remanded to district courts, compared to other cases. This effect varies with judicial ideologies, suggesting that the tendency to (subsequently) remand might be driven by moral hazard problems rather than case-relevant attributes.