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Punitive Damages, Social Norms, and Economic Analysis

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  • Cooter, Robert D.

Abstract

Law and morality forbid acts that cause uncompensable harms or create unreasonable risks. When people intentionally commit such acts, courts express anger and indignation at the wrongdoer through speech and punishment. In a system of social norms with multiple equilibria, expressions of emotion signal commitment and coordinate expectations. In a system of social norms with a unique, stable equilibrium, legal sactions deter marginally. Social norms, however, provide a better guide to the need for punitive damages than to their extent. Courts make a serious error in asking jurors to assign punitive damages without providing detailed instructions on their computation. The court in a typical case should impose the minimum punishment required to deter wrongdoing.

Suggested Citation

  • Cooter, Robert D., 1999. "Punitive Damages, Social Norms, and Economic Analysis," Berkeley Olin Program in Law & Economics, Working Paper Series qt7h38w307, Berkeley Olin Program in Law & Economics.
  • Handle: RePEc:cdl:oplwec:qt7h38w307
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    References listed on IDEAS

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    1. Cooter, Robert, 1998. "Expressive Law and Economics," The Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 585-608, June.
    2. Robert Cooter, 1998. "Expressive Law and Economics," CESifo Working Paper Series 161, CESifo Group Munich.
    3. Robert D. Cooter, 1991. "Economic Theories of Legal Liability," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 11-30, Summer.
    4. Eisenberg, Theodore, et al, 1997. "The Predictability of Punitive Damages," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 623-661, June.
    5. Cooter, Robert, 1998. "Expressive Law and Economics," Berkeley Olin Program in Law & Economics, Working Paper Series qt3w34j60j, Berkeley Olin Program in Law & Economics.
    6. Landes, William M. & Posner, Richard A., 1981. "An economic theory of intentional torts," International Review of Law and Economics, Elsevier, vol. 1(2), pages 127-154, December.
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