"Twelve People of Average Ignorance:" An Economic Analysis of Jury Verdicts and the Awarding of Punitive Damages
Parker, Erin J.
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Over the past few decades, the debate over the ability of juries to competently decide punitive damage verdicts has been escalating. Some scholars fear that the lack of an overall understanding of punitive damage laws has forced jurors to make damage assessments irrationally and unpredictably, ultimately increasing award frequency and magnitude. Although the majority of current research supports these claims, an overall lack of data makes it difficult to clearly distinguish trends and has led to further polarization of opinions on this issue. I first explain punitive damage theory using an economics and law approach to establish a framework for the understanding of damage assessment as well as an appreciation for the complexity of the information that jurors must take into account when deciding awards. I then use the findings from various studies to substantiate my claims that awards decisions are often made erratically. Finally, a case study of California tort reform and damage trends is reviewed in order to analyze damage theory under the context of a concrete example. I find that the decision making used to arrive at damage verdicts shows an inability to conceptualize the importance of optimal deterrence theory as well as the benefits of deriving damages from a multiplier. Multiple studies reveal a predisposition to group polarization and anchoring effects that further bias award assessments. In addition, although tort reform is a principle policy issue in the California legal system, it fails to target problems associated with juror deliberation, which has led to an overall unpredictability in the trend of damage awards over the past decade.