Efficiency Effects of Punitive Damages

Peter Diamond

Working papers from Massachusetts Institute of Technology (MIT), Department of Economics

Abstract: This paper develops a typology of different behaviors that might be viewed as outrageous by a jury and subjected to punitive damages. The paper derives the level of punitive damages for achieving economic efficiency in four different situation - malice and three settings where a jury might find reckless disregard - a rational response to insufficient compensatory damages, a nonrational disregard to risk, and a rational response when compensatory damages are adequate.

Keywords: LAW (search for similar items in EconPapers)
JEL-codes: K10 K13 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1997
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