IDEAS home Printed from https://ideas.repec.org/p/cre/crefwp/139.html
   My bibliography  Save this paper

Damage Averaging and the Formation of Class Action Suits

Author

Listed:

Abstract

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.

Suggested Citation

  • Nicolas Marceau & Steeve Mongrain, 2001. "Damage Averaging and the Formation of Class Action Suits," Cahiers de recherche CREFE / CREFE Working Papers 139, CREFE, Université du Québec à Montréal.
  • Handle: RePEc:cre:crefwp:139
    as

    Download full text from publisher

    File URL: http://www.unites.uqam.ca/eco/CREFE/cahiers/cah139.pdf
    File Function: Main text
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. Nuno Garoupa, 1997. "The economics of organized crime and optimal law enforcement," Economics Working Papers 246, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 1997.
    3. Burbidge, John B. & James A. DePater & Gordon M. Meyers & Abhijit Sengupta, 1997. "A Coalition-Formation Approach to Equilibrium Federations and Trading Blocs," American Economic Review, American Economic Association, pages 940-956.
    4. Sylvaine Poret, 2001. "The Illicit Drug Market : Paradoxical Effects of Law Enforcement Policies," Working Papers 2001-02, Center for Research in Economics and Statistics.
    5. Nicolas Marceau & Gordon M. Myers, 2000. "From Foraging to Agriculture," Cahiers de recherche CREFE / CREFE Working Papers 103, CREFE, Université du Québec à Montréal.
    6. Skaperdas, S. & Syropoulos, C., 1993. "Gangs as Primitive States," Papers 92-93-02, California Irvine - School of Social Sciences.
    7. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, pages 286-336.
    8. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-1064, July.
    9. Garoupa, Nuno, 2000. "The Economics of Organized Crime and Optimal Law Enforcement," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 278-288, April.
    10. Besley, Timothy, 1989. "Commodity taxation and imperfect competition : A note on the effects of entry," Journal of Public Economics, Elsevier, pages 359-367.
    11. John B. Burbidge & James A. DePater & Gordon M. Myers & Abhijit Sengupta, 1996. "A Coalition-formation Approach to Equilibrium Federations and Trading Block s," Department of Economics Working Papers 1996-05, McMaster University.
    12. Neher, Philip A, 1978. "The Pure Theory of the Muggery," American Economic Review, American Economic Association, pages 437-445.
    13. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    14. Caulkins Jonathan P., 1995. "Domestic Geographic Variation in Illicit Drug Prices," Journal of Urban Economics, Elsevier, vol. 37(1), pages 38-56, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew F. Daughety & Jennifer F. Reinganum, 2011. "A dynamic model of lawsuit joinder and settlement," RAND Journal of Economics, RAND Corporation, pages 471-494.
    2. Chopard, Bertrand & Cortade, Thomas & Langlais, Eric, 2010. "Trial and settlement negotiations between asymmetrically skilled parties," International Review of Law and Economics, Elsevier, pages 18-27.
    3. Bruno Deffains & Eric Langlais, 2011. "Informational externalities and settlements in mass tort litigations," European Journal of Law and Economics, Springer, pages 241-262.
    4. Deffains Bruno & Demougin Dominique, 2011. "Class Actions, Compliance and Moral Cost," Review of Law & Economics, De Gruyter, vol. 7(2), pages 481-500, December.
    5. repec:ebl:ecbull:v:11:y:2007:i:2:p:1-7 is not listed on IDEAS
    6. Baumann, Florian & Friehe, Tim, 2009. "On the superiority of damage averaging in the case of strict liability," International Review of Law and Economics, Elsevier, vol. 29(2), pages 138-142, June.
    7. Deffains, Bruno & Langlais, Eric, 2007. "Informational externalities and informational sharing in class action suits," MPRA Paper 4846, University Library of Munich, Germany.
    8. Tim Friehe, 2007. "On the incentive effects of damage averaging in tort law," Economics Bulletin, AccessEcon, vol. 11(2), pages 1-7.
    9. Sophie Harnay & Alain Marciano, 2011. "Seeking rents through class actions and legislative lobbying: a comparison," European Journal of Law and Economics, Springer, vol. 32(2), pages 293-304, October.

    More about this item

    Keywords

    Class action suit; damage averaging;

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cre:crefwp:139. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stéphane Pallage). General contact details of provider: http://edirc.repec.org/data/crefeca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.