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Punitive Damages and the Processing of Tort Claims

Author

Listed:
  • Thomas A. Eaton

    (University of Georgia)

  • David B. Mustard

    (University of Georgia)

  • Susette M. Talarico

    (University of Georgia)

Abstract

Punitive damages are one of the most controversial aspects of tort litigation and have been the subject of various theoretical, empirical, and experimental studies. One criticism of punitive damages refers to the effect that they have on civil litigation processes. In particular, Polinsky (1997) argues that the uncertainty and unpredictability that punitive damage claims inject into a case may increase both the rate and amount of settlements, thus implying that punitive damages carry systemic consequences for the general processing of tort claims. This paper represents the first, empirical examination of this implication. With one of the largest and most comprehensive data sets of tort litigation (over 25,000 cases filed from 1994 through 1997 in several counties in Georgia), 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 for type of case, the presence or absence of caps on damages, and other potentially important 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. "Punitive Damages and the Processing of Tort Claims," Law and Economics 0501002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwple:0501002
    Note: Type of Document - pdf; pages: 38
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/0501/0501002.pdf
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    References listed on IDEAS

    as
    1. Viscusi, W Kip, 2001. "The Challenge of Punitive Damages Mathematics," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 313-350, Part I Ju.
    2. 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.
    3. Viscusi, W Kip, 2001. "Jurors, Judges, and the Mistreatment of Risk by the Courts," The Journal of Legal Studies, University of Chicago Press, vol. 30(1), pages 107-142, January.
    4. 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.
    5. 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.
    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.
    7. Cass R. Sunstein & Daniel Kahneman & David Schkade & Ilana Ritov, 2001. "Predictably Incoherent Judgements," Discussion Paper Series dp273, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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    Cited by:

    1. Robert E. Hoyt & David B. Mustard & Lars S. Powell, 2005. "The Effectiveness of Insurance Fraud Statutues: Evidence from Automobile Insurance," Risk and Insurance 0501001, University Library of Munich, Germany.

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    More about this item

    Keywords

    Torts; Litigation; Punitive Damages; Settlement Rates;
    All these keywords.

    JEL classification:

    • K - Law and Economics

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