Assessing Punitive Damages

Daniel Kahneman

Princeton University

David Schkade

University of California, San Diego

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Yale Law Journal, May 1998, fortchoming.

This essay reports and discusses the implications of an experimental study involving punitive damage awards. The study finds that in products liability cases, people's normative judgments (about outrageousness and appropriate punishment) are relatively uniform, at least when measured on a bounded numerical scale (0 to 6). With the unbounded dollar scale, however, outcomes become extremely erratic and unpredictable. Various reform proposals, designed to overcome erratic awards, are discussed, including damage caps, compensatory judgment "multipliers," and conversion formulas based on jury judgments on a bounded numerical scale. Implications are also discussed for many other issues of law and economic valuation, including compensatory damages in such areas as pain and suffering, libel, sexual harassment and other civil rights violations, contingent valuation, and intentional infliction of emtional distress.

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Date posted: December 15, 1997  

Suggested Citation

Kahneman, Daniel and Schkade, David and Sunstein, Cass R., Assessing Punitive Damages. Yale Law Journal, May 1998, fortchoming.. Available at SSRN: https://ssrn.com/abstract=49660

Contact Information

Daniel Kahneman
Princeton University ( email )
Department of Psychology 3-2-1 Green Hall
Princeton, NJ 08544
United States
609-258-2280 (Phone)
609-258-2809 (Fax)

David Schkade
University of California, San Diego ( email )
Rady School of Management
9500 Gilman Drive
La Jolla, CA 92093
United States
858-822-5933 (Phone)
HOME PAGE: http://management.ucsd.edu/cms/showcontent.aspx?ContentID=89

Cass R. Sunstein (Contact Author)
Harvard Law School ( email )
1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)

Harvard University - Harvard Kennedy School (HKS) ( email )
79 John F. Kennedy Street
Cambridge, MA 02138
United States
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