Making Decisions About Liability And Insurance

pp 17-33

Intuitions about Penalties and Compensation in the Context of Tort Law

  • Jonathan BaronAffiliated withDepartment of Psychology, University of Pennsylvania
  • , Ilana RitovAffiliated withDepartment of Industrial Engineering and Management, Ben-Gurion University

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Students, retired judges, economists, and others made judgments of appropriate penalties and compensation for hypothetical injuries. In some scenarios, compensation was paid by the government and penalties were paid to the government, so the two could differ. Penalties were generally uninfluenced by their deterrent effect on future behavior. Penalties were greater when they were paid directly to the victim than when they were paid to the government. Compensation was affected by whether injuries were caused by people or by nature, or by acts vs. omissions. These effects are not justified according to consequentialist views of penalties and compensation. We suggest that people are overgeneralizing reasonable rules and that such overgeneralization may be involved in perverse effects of tort law.

Key words

tort law penalties compensations intuitive judgments