Punitive Damages: How Jurors Fail to Promote Efficiency

Abstract

Evidence of corporate risk-cost balancing often leads to inefficient punitive damages awards, suggesting that jurors fail to base their decision making on principles of economic efficiency. In this Article, Professor Viscusi presents the results of two experiments regarding jury behavior and punitive damages. In the first experiment, Professor Viscusi found that mock jurors punish companies for balancing risk against cost, although award levels vary depending on how the economic analysis is presented at trial. The results of the second experiment suggested that mock jurors are unwilling or unable to follow a set of model jury instructions designed to generate efficient damages awards. Professor Viscusi concludes that neither risk-cost analysis nor this particular set of instructions can encourage jurors to behave efficiently. As a result, damages awards may create undesirable incentives for companies making choices about safety.