Incentive Effects of Class Actions and Punitive Damages Under Alternative Procedural Regimes
University of Milan - Faculty of Law
Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics; University of St. Thomas School of Law
University of Minnesota - Law School; University of Bologna
September 11, 2010
Minnesota Legal Studies Research Paper No. 10-50
In an economic perspective, punitive damages and class actions can be viewed as sharing a common economic function – creating optimal deterrence. Building on Parisi and Cenini (2010), we study the effect of alternative procedural regimes on the effectiveness of punitive damages and class actions. Specifically, we compare the workings of punitive damages and class actions in the American and English (“loser-pays”) regimes. Our findings help explain the limited use and late adoption of class actions and punitive damages in Europe.
Number of Pages in PDF File: 15
Keywords: Punitive Damages, Class Actions, Loser-Pays Rule, Incentives
JEL Classification: K13, K4
Date posted: September 14, 2010
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