Behavioral Class Action Law

Abstract

Behavioral law and economics has been deployed to analyze nearly every field of law. Class action practice and procedure is a notable exception. This Article is the first to supplement stagnating class action debates and the traditional law and economics account of class action law with behavioral psychology. It draws on a litany of behavioral tendencies, biases, and pathologies— ranging from prospect theory, loss aversion, anchoring, and the status quo bias to the availability heuristic, group-attribution error, reactive devaluation, and the endowment effect—and considers their application to class action practice generally and Rule 23 in particular. In addition to this descriptive survey, this Article makes three contributions to class action scholarship. First, it applies behavioral psychology to an unresolved puzzle: how to explain opt-out rights. Traditional law and economics cannot explain why Rule 23 permits absent class members to opt-out of certain class actions, which appears inefficient and dependent on irrational behavior, or why this opt-out right is exercised according to predictably irrational patterns. However, behavioral law and economics fills these analytical gaps. Second, this Article demonstrates the prescriptive power of behavioral law and economics by illustrating how absent class members can be nudged toward class settlement by self-interested choice architects. Finally, this Article crystallizes the judicial role in light of the potency of behavioral psychology, choice architecture, and nudging in class settlement notices.

65.5.2-Parkinson
By uclalaw