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The Effects of Seeking Punitive Damages on the Processing of Tort Claims

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  • Thomas A. Eaton
  • David B. Mustard
  • Susette M. Talarico

Abstract

Punitive damages are a controversial aspect of tort litigation and have been the subjct of numerous theoretical, empirical, and experimental studies. Critics have argued that the uncertainty and unpredictability that punitive damages claims inject into a case may increase the rate and amount of settlements and carry systemic consequences for the general processing of tort claims. This paper represents the first empirical examination of this hypothesis. With one of the most comprehensive data sets of tort litigation, we analyze cases that are likely to have caps on punitive damages awards and cases that are likely to be uncapped. We examine the effect of the decision to seek punitive damages on several major decision points in the tort litigation process in a series of logit regression models. With extensive control variables, we find that seeking punitive damages has no statistically significant effect on most phases of the tort litigation process.

Suggested Citation

  • Thomas A. Eaton & David B. Mustard & Susette M. Talarico, 2005. "The Effects of Seeking Punitive Damages on the Processing of Tort Claims," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 343-369, June.
    • Handle: RePEc:ucp:jlstud:v:34:y:2005:p:343-369
    DOI: 10.1086/428021
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    References listed on IDEAS

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    1. Polinsky, A Mitchell, 1997. "Are Punitive Damages Really Insignificant, Predictable, and Rational? A Comment on Eisenberg et al," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 663-677, June.
    2. Moller, Erik K & Pace, Nicholas M & Carroll, Stephen J, 1999. "Punitive Damages in Financial Injury Jury Verdicts," The Journal of Legal Studies, University of Chicago Press, vol. 28(2), pages 283-339, June.
    3. Karpoff, Jonathan M & Lott, John R, Jr, 1999. "On the Determinants and Importance of Punitive Damage Awards," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 527-573, April.
    4. Joni Hersch & W. Kip Viscusi, 2004. "Punitive Damages: How Judges and Juries Perform," The Journal of Legal Studies, University of Chicago Press, vol. 33(1), pages 1-36, January.
    5. Sunstein, Cass R & Schkade, David A & Kahneman, Daniel, 2000. "Do People Want Optimal Deterrence?," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 237-253, January.
    6. Eisenberg, Theodore & Goerdt, John & Ostrom, Brian & Rottman, David & Wells, Martin T, 1997. "The Predictability of Punitive Damages," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 623-661, June.
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