Time Is Money: An Empirical Assessment of Non-Economic Damages Arguments

51 Pages Posted: 4 May 2016 Last revised: 10 May 2017

John E. Campbell

University of Denver Sturm College of Law

Bernard Chao

University of Denver Sturm College of Law

Christopher T. Robertson

University of Arizona - James E. Rogers College of Law; Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics

Date Written: March 2, 2017

Abstract

Non-economic damages (pain and suffering) are the most significant and variable components of liability. Our survey of 51 U.S. jurisdictions shows wide heterogeneity in whether attorneys may quantify damages as time-units of suffering (“per diem”) or demand a specific amount (“lump sum”). Either sort of large number could exploit an irrational anchoring effect.

We performed a realistic online, video-based experiment with 732 human subjects. We replicate prior work showing that large lump sum demands drive larger jury verdicts, but surprisingly find no effect of similarly-sized per diem anchors. We do find per diem effects on binary liability outcomes, and thus expected case values, however, and we discuss potential causal mechanisms, based in the cognitive science literature.

This empirical work contradicts the speculations by scholars and courts that per diem arguments powerfully impact damage awards. Nonetheless, plaintiffs lawyers have been wise to use per diem arguments when allowed to do so, since our data surprisingly shows them enhancing the expected value of cases by increasing win rates. Past justifications for prohibition are not supported by empirical data.

Keywords: empirical, remedies, damages, non-economic, anchoring, per diem, tort

JEL Classification: K13

Suggested Citation

Campbell, John E. and Chao, Bernard and Robertson, Christopher T., Time Is Money: An Empirical Assessment of Non-Economic Damages Arguments (March 2, 2017). Washington University Law Review, Forthcoming; U Denver Legal Studies Research Paper No. 16-21; Arizona Legal Studies Discussion Paper No. 16-12. Available at SSRN: https://ssrn.com/abstract=2770616 or http://dx.doi.org/10.2139/ssrn.2770616

John E. Campbell

University of Denver Sturm College of Law ( email )

2255 E. Evans Avenue
Denver, CO 80208
United States

Bernard H. Chao (Contact Author)

University of Denver Sturm College of Law ( email )

2255 E. Evans Avenue
Denver, CO 80208
United States

Christopher T. Robertson

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States

HOME PAGE: http://www.law.arizona.edu/faculty/getprofile.cfm?facultyid=714

Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics ( email )

23 Everett Street
Cambridge, MA 02155
United States

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