Open Access. Powered by Scholars. Published by Universities.®

Law and Economics Commons

Open Access. Powered by Scholars. Published by Universities.®

1999

University of Michigan Law School

Law and Psychology

Articles 1 - 1 of 1

Full-Text Articles in Law and Economics

Deterrence And Damages: The Multiplier Principle And Its Alternatives, Richard Craswell Jun 1999

Deterrence And Damages: The Multiplier Principle And Its Alternatives, Richard Craswell

Michigan Law Review

One purpose of fines and damage awards is to deter harmful behavior. When enforcement is imperfect, however, so the probability that any given violation will be punished is less than 100%, the law's deterrent effect is usually thought to be reduced. Thus, it is often said that the ideal penalty (insofar as deterrence is concerned) equals the harm caused by the violation multiplied by one over the probability of punishment. For example, if a violation faces only a 25% (or one-in-four) chance of being punished, on this view the optimal penalty would be four times the harm caused by the …