The Economics of Class Actions and Class Action Waivers
35 Pages Posted: 11 Jun 2013 Last revised: 18 Mar 2015
Date Written: January 1, 2015
Class action litigation has generated a series of recent Supreme Court decisions imposing greater federal court supervision over the prosecution of collective injury claims. This group of cases raises the question whether class action waivers should be permitted on policy grounds. I examine the economics of class actions and waivers in this paper. I distinguish between the standard one-on-one litigation environment and the class action environment. In the standard environment, waivers between informed agents enhance society’s welfare. In the class action environment, in contrast, not all waivers are likely to enhance society’s welfare.
Keywords: class action, class action waivers, economics of class actions, economics of class action waivers
JEL Classification: K00, K13, K49
Suggested Citation: Suggested Citation