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Assuring Civil Damages Adequately Deter: A Public Good Experiment

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  • Theodore Eisenberg
  • Christoph Engel

Abstract

To explore damages rules' deterrent effect we use a public good experiment to tailor punishment to rules used in civil litigation. The experimental treatments are analogous to: (1) damages limited to harm to an individual, (2) damages limited to harm to a group, such as in class actions, and (3) treble damages. For (1) and (2) we also manipulate the probability of a player being entitled to claim damages. The treatments with damages limited to harm to an individual do not prevent deterioration in cooperation over time but deterioration is slower. In the class action treatment, cooperation is stable over time if the probability of having to pay damages is sufficiently high. The same holds for the treble damages treatment. The results persist in variations of (1) and (2) in which the player imposing damages may have them forfeited with no benefit to her. We can therefore rule out that the beneficial effect of sanctions hinges on the participants knowing that the player imposing sanctions cannot intend to enrich herself.

Suggested Citation

  • Theodore Eisenberg & Christoph Engel, 2014. "Assuring Civil Damages Adequately Deter: A Public Good Experiment," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 11(2), pages 301-349, June.
    • Handle: RePEc:wly:empleg:v:11:y:2014:i:2:p:301-349
    DOI: 10.1111/jels.12042
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    2. Christoph Engel & Werner Gueth, 2018. "Modeling a satisficing judge," Rationality and Society, , vol. 30(2), pages 220-246, May.
    3. Deffains, Bruno & Espinosa, Romain & Fluet, Claude, 2019. "Laws and norms: Experimental evidence with liability rules," International Review of Law and Economics, Elsevier, vol. 60(C).
    4. Christoph Engel & Rima Maria Rahal, 2020. "What the Judge Argues is Not What the Judge Thinks - Eye Tracking Evidence about the Normative Weight of Conflicting Concerns in a Torts Case," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2020_03, Max Planck Institute for Research on Collective Goods, revised 01 Mar 2021.
    5. Alon Klement & Keren Weinshall-Margel, 2016. "Cost-Benefit Analysis of Class Actions: An Israeli Perspective," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(1), pages 75-103, March.
    6. Guerra Alice & Parisi Francesco, 2022. "Injurers versus Victims: (A)Symmetric Reactions to Symmetric Risks," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 22(2), pages 603-620, June.
    7. Pieter T. M. Desmet & Franziska Weber, 2022. "Infringers’ willingness to pay compensation versus fines," European Journal of Law and Economics, Springer, vol. 53(1), pages 63-80, February.

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