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Diffusion of Legal Innovations: The Case of Israeli Class Actions
Author(s) -
Engel Christoph,
Klement Alon,
Weinshall Keren
Publication year - 2018
Publication title -
journal of empirical legal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.529
H-Index - 24
eISSN - 1740-1461
pISSN - 1740-1453
DOI - 10.1111/jels.12202
Subject(s) - imitation , class action , phenomenon , economics , class (philosophy) , microeconomics , profit (economics) , momentum (technical analysis) , action (physics) , business , actuarial science , financial economics , computer science , social psychology , psychology , artificial intelligence , physics , state (computer science) , algorithm , quantum mechanics
Under the standard model in law and economics, agents maximize expected profit subject to constraints set by legal rules. In such a model, the expected reaction to legal innovations is immediate. However, this is not what we observe after class actions have been introduced into Israeli law. For a long time, the new procedure was rarely utilized. Then, the adoption process gained momentum. We discuss alternative explanations for this phenomenon. We find that class action filings are explained not only by law firms' own litigation outcomes, but also by the available information about other firms' success, and their cumulative filing pattern. We thus explain the observed filing pattern by both individual and social learning, and cannot exclude mere social imitation.