Punitive Damages - So, his expected damages are now: E[D+R]...

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Punitive Damages - What is it about an injurer that would give them the incentive to act egregiously? - Define the proportion of Tort relationships that will actually be pursued by Victims o The Doctrine is strict liability The Expected Damages and injurer will pay are: αE[D] = αpD So, if we introduce Punitive Damages = R, then if case is decided against injurer, he pays D+R
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Unformatted text preview: So, his expected damages are now: E[D+R] = p(D+R] Injurer now has to account for probability of paying R Expected Social Damages: p[D+R] = pD Solving for R: o pR = pD-pD o R = (1-)D o R= (1-/)*D If =0.10 If D=100 Then R = (.9/.1)*100 = $900 Punitive Damages have a multiplier effect...
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This note was uploaded on 10/19/2008 for the course ECON 4450 taught by Professor Turnbull during the Spring '08 term at Georgia State University, Atlanta.

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