Common law efficiency when joinder and class actions fail as aggregation devices.

• Fagan, Frank ^[1] ; Khan, Urmee ^[2]
  1. [1] EDHEC Business SchoolLilleFrance
  2. [2] University of CaliforniaRiversideUSA
• Localización: European journal of law and economics, ISSN 0929-1261, Vol. 47, Nº 1, 2019, pág. 1
• Idioma: inglés
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• Resumen

  • We develop a litigant-based model of rule selection where parties choose to litigate rules that are efficient between two parties, but inefficient as between a potential class or potentially joined litigants and a counter-party. Collective action problems lead to incomplete party formation, which generates continuous litigation of seemingly efficient rules. By accounting for externalities borne by non-parties, we show that rules which are allocatively efficient across both parties and non-parties are evolutionary stable for any given judicial ideology or judicial preference for prestige, thus preserving the explanatory power of the Efficiency of Common Law Hypothesis. [ABSTRACT FROM AUTHOR]