The Determinants of State-Level Caps on Punitive Damages: Theory and Evidence

Thomas Miceli and Michael Stone

No 2010-25, Working papers from University of Connecticut, Department of Economics

Abstract: Under the standard economic model of torts, punitive damages correct for imperfect detection. Incorporating litigation costs into the model provides a justification for punitive damage caps. At the optimum, caps balance deterrence against the cost of litigation. Empirical testing of the model is performed via Cox proportional and parametric hazard analyses, using a panel dataset from 1981 to 2007. The results reveal a positive relationship between judicial and legal expenditures (a proxy for legal costs) and cap enactment, and a negative relationship between state GSP (a proxy for damages) and cap enactment. Cap enactment is also influenced by political ideology.

Keywords: Deterrence; litigation costs; punitive damages; statutory caps (search for similar items in EconPapers)
JEL-codes: K13 K41 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2010-10
New Economics Papers: this item is included in nep-law
Note: We acknowledge the helpful advice of Stephen Ross and the comments of participants at the Department of Economics Brownbag, University of Connecticut, November 2009.
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://media.economics.uconn.edu/working/2010-25.pdf Full text (application/pdf)

Related works:
Journal Article: THE DETERMINANTS OF STATE-LEVEL CAPS ON PUNITIVE DAMAGES: THEORY AND EVIDENCE (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2010-25

Access Statistics for this paper

More papers in Working papers from University of Connecticut, Department of Economics University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063. Contact information at EDIRC.
Bibliographic data for series maintained by Mark McConnel ().