Common Law Efficiency When Joinder and Class Actions Fail as Aggregation Devices
17 Pages Posted: 18 Nov 2018 Last revised: 22 Mar 2019
Date Written: November 5, 2018
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.
Keywords: Efficient Common Law Hypothesis, Joinder, Class Actions, Baconian Judges
JEL Classification: K13, K15, K41
Suggested Citation: Suggested Citation