Document Type

Working Paper

Publication Date

4-12-2014

SSRN Discipline

Economics Research Network; Legal Scholarship Network; Experimental & Empirical Studies eJournals; Law & Society eJournals; Law & Society: Private Law eJournals; LSN Subject Matter eJournals; Financial Economics Network; LSN Partners in Publishing Journals; LSN Wiley-Blackwell Publishers Journals; Political Science Network

Abstract

The distribution of blockbuster punitive damages awards has fat tails similar to the distributions of losses from natural disasters Extremely large awards occur more often and are more difficult to predict than if blockbuster awards were distributed normally The size and predictability of awards are important factors in the US Supreme Courts decisions on punitive damages This article examines the effect of the Courts decision in State Farm v Campbell on blockbuster punitive damages awards State Farm shifts the fat tail of the distribution of blockbuster awards down or "thins" the tail which is consistent with a restraining effect on award size State Farm reduces the size of blockbuster awards in general but this reduction is most salient in the upper half of the distribution of awards State Farm also has a negative influence on the probability of exceeding a single"digit ratio between punitive and compensatory damages This article also examines the largest awards and considers why defendants may not pay large punitive damages awards

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