The Determinants Of State-Level Caps On Punitive Damages: Theory And Evidence
AbstractUnder 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.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 31 (2013)
Issue (Month): 1 (01)
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Other versions of this item:
- Thomas J. Miceli & Michael P. Stone, 2010. "The Determinants of State-Level Caps on Punitive Damages: Theory and Evidence," Working papers 2010-25, University of Connecticut, Department of Economics.
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
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