Can Decoupling Punitive Damages Deter an Injurer’s Harmful Activity?

Ikeda Yasuhiro () and Mori Daisuke ()
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Ikeda Yasuhiro: Kumamoto University, Faculty of Law, Kumamoto, Japan
Mori Daisuke: Kumamoto University, Faculty of Law, Kumamoto, Japan

Review of Law & Economics, 2015, vol. 11, issue 3, 513-528

Abstract: This study theoretically analyzes the effect of decoupling punitive damages under the adversarial system. Decoupling means taking punitive award windfalls away from plaintiffs and placing them into state-administered funds. In particular, it aims to reveal the incentive structure of decoupling and examine how this affects human behaviors. Although some commentators argue that decoupling punitive damages effectively disgorges plaintiffs of any potential windfall without diminishing the deterrent effect of punitive damages, we demonstrate that decoupling actually reduces the deterrence effect under the adversarial system.

Keywords: decoupling; punitive damages; adversarial system; deterrence; split-recovery statute (search for similar items in EconPapers)
JEL-codes: D72 K13 K41 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/rle-2014-0033

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