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Damage Averaging and the Formation of Class Action Suits

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Within a class action suit, similarly injured individuals can collectively obtain compensation through the justice system. Damage averaging occurs when the compensation awarded by the court to individual members is partly or completely determined by the average damage of the class. The key role of damage averaging in influencing the identity of the individual that will initiate the class action suit is illustrated in a waiting game. If there is complete averaging, the individual with the lowest damage will initiate the class action suit, while if there is less damage averaging, other individuals may do so. Grâce au recours collectif, des individus ayant subi des dommages d'ampleur différente mais de même nature peuvent obtenir compensation en cour. Il est possible que le montant accordé à un individu par la cour ne soit pas strictement une compensation pour les dommages qu'il a subis, mais qu'il réflète aussi, en partie, la moyenne des dommages subis par tous les participants au recours collectif. Envisageant la formation d'un recours collectif comme un jeu d'attente, nous montrons que l'usage de la moyenne des dommages par la cour est un déterminant important de l'identité de celui qui initiera le recours collectif. Si seule la moyenne des dommages est utilisée par la cour dans l'établissement des compensations, alors l'individu ayant subi les plus petits dommages initiera le recours collectif. Si la cour utilise également les dommages individuels dans l'établissement des compensations, alors d'autres individus pourraient vouloir l'initier.

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Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 139.

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Length: 17 pages
Date of creation: Sep 2001
Handle: RePEc:cre:crefwp:139
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