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Diffusion of Legal Innovations: The Case of Israeli Class Actions

Christoph Engel (), Alon Klement () and Karen Weinshall Margel ()
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Alon Klement: Buchman Faculty of Law, Tel Aviv University
Karen Weinshall Margel: Hebrew University of Jerusalem - Faculty of Law

No 2017_11, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: In law and economics, it is standard to model legal rules as an opportunity structure. The law’s subjects maximize expected profit, given these constraints. In such a model, the reaction to legal innovation is immediate. This is not what we observe after class action is introduced into Israeli law. For a long time, the new remedy is almost unused. Then the adoption process gains momentum. We discuss alternative options for theorizing the effect. We find that market entry is not only explained by the available information about profitability, but also by the adoption pattern of others. When deciding whether to bring further claims, law firms also react to the experiences they have made themselves. We thus explain the pattern by individual and social learning, and cannot exclude mere social imitation.

Keywords: Legal Innovation; Diffusion; Imitation; Learning; Class Action (search for similar items in EconPapers)
JEL-codes: D02 D21 D22 D83 K10 K41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino and nep-law
Date: 2017-06, Revised 2018-01
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