Portfolios to Satisfy Damage Judgments: A Simple Approach

Ferdinand K. Levy
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Ferdinand K. Levy: Professor of Economics, College of Industrial Management, Georgia Institute of Technology, Atlanta, Georgia 30332

Interfaces, 1978, vol. 9, issue 1, 106-107

Abstract: In a recent article in this journal, Professors Arnold and Botkin describe a linear programming [Arnold, Larry R., Donal Botkin. 1978. Portfolios to satisfy damage judgment: A linear programming approach. Interfaces 8 (2, February) 38--42.] procedure which will provide a minimum lump sum damage award to a successful plaintiff in a tort.Arnold and Botkin's paper suffers from a flaw which might keep a court from adopting the model. This flaw amply demonstrates why management scientists often have a very difficult time “selling their wares” to either laymen (like the lawyers or judge in Arnold and Botkin's article) or to decision makers. That is, the authors use a pseudocomplicated (to the layman) linear programming model to determine a solution, when a trivial, easily explainable and comprehendable rule-of-thumb, as we shall show, will suffice.

Date: 1978
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