'Measuring Judicial Biases with Artificial Intelligence: Evidence from Chinese IP Litigations', a seminar by Professor Hanming Fang (University of Pennsylvania)

Measuring Judicial Biases with Artificial Intelligence: Evidence from Chinese IP Litigations

By Professor Hanming Fang from University of Pennsylvania

Abstract

How does judicial fairness in intellectual property (IP) litigations shape the incentives to innovate? This talk examines local bias in IP litigation and its consequences for firm-level innovation in China. Using a dataset from China Judgements Online on Chinese IP court decisions from 2014–2020, a striking puzzle emerges: despite widespread concerns about local protectionism, non-local plaintiffs frequently win at higher rates than local ones. Two competing forces explain this — a "local protectionism effect," whereby local fiscal incentives bias courts toward local firms, and a "picket fence effect," whereby litigants anticipate bias and self-select out of bringing cases, quietly distorting the pool of disputes that reach the courtroom. To cut through this identification challenge, we train an LLM–based "AI court'' on cases in which both plaintiff and defendant are non-local for which the incentives of local courts to bias either side are absent, generating counterfactual fair win-rates for all other disputes. Comparing observed and predicted win-rates reveals significant judicial bias. A 2019 reform centralizing appellate jurisdiction over a subset of IP cases, namely the technical cases, directly to the National Supreme Court shows that stronger central supervision substantially improves judicial accuracy and curtails bias — and measurably increases firm innovation.  The findings underscore that impartial courts are not just a procedural ideal, but a concrete driver of economic dynamism.

About the speaker

Hanming Fang is Norman C. Grosman Professor of Economics at the University of Pennsylvania. He also holds a secondary appointment at the Department of Health Care Management (HCM) and the Department of Business Economics and Public Policy (BEPP) at the Wharton School. He is an applied microeconomist with broad theoretical and empirical interests focusing on public economics, including topics such as discrimination, social insurance, and welfare reform, health insurance markets, and population aging. In 2008, Professor Fang was awarded the 17th Kenneth Arrow Prize by the International Health Economics Association (iHEA) for his research on the sources of advantageous selection in the Medigap insurance market. He was elected as a Fellow of the Econometric Society in 2018.

Professor Fang is currently working on issues related to insurance markets, particularly the interaction between the health insurance reform and the labor market, and the alternative health insurance reform proposals. He also studies the Chinese economy, particularly on issues related to political economy, population aging and social security.

He has served as a co-editor for leading economics journals, including the Journal of Public Economics and the International Economic Review, and has served on the editorial board for numerous journals. He currently serves as a co-editor for the Journal of Health Economics, and is on the editorial committee of Annual Review of Economics (2020-2028). He is a research associate at the National Bureau of Economic Research (NBER), where he served as the acting director of the Chinese economy working group from 2014 to 2016. He is also a research associate of the Population Studies Center and Population Aging Research Center, and a Senior Fellow at the Leonard Davis Institute of Health Economics, an Executive Committee Member of the Center for the Study of Contemporary China, all at the University of Pennsylvania. He also served as the Scientific Director of Australia-China Population Aging Research Hub at the University of New South Wales in Australia, and is a Senior Fellow of the Asian Bureau of Economic and Finance Research (ABFER) in Singapore and a Research Fellow of the IZA in Germany.

Professor Fang received his Ph.D. in Economics from the University of Pennsylvania in 2000. Before joining the Penn faculty, he held positions at Yale University and Duke University.

https://web.sas.upenn.edu/hfang/