Determining Punitive Damages: Empirical Insights and Implications for Reform

Abstract

Large punitive damage verdicts are the objects of substantial media attention, stir incredible controversy, and have fueled sweeping reforms. However, these reform efforts have been largely uninformed by the now substantial body of empirical literature examining punitive damages decision making. The research suggests that jurors perform some aspects of their decision task quite well (and make decisions that are similar to those of judges in many ways), effecting intuitive notions of retribution and demonstrating sensitivity to several of the key legal factors that underlie punitive damages. Conversely, jurors have difficulty understanding legal instructions, giving effect to optimal deterrence, and translating their outrage into dollars. However, most current reforms fail to take into account the psychology of punitive damages decision making and, thus, may not be the best ways to improve the processes by which punitive damages are determined. In fact, these reforms have been primarily designed to address an illusory problem, have many counterintuitive effects, and fail to address the difficulties that jurors have in determining punitive damages. In contrast, the research suggests several ways in which the jury decision-making task could be altered to specifically address the problematic aspects of the process identified in the literature.