Legal Remedies Commons^™

A Financial Economic Theory Of Punitive Damages, Robert J. Rhee

Michigan Law Review

This Article provides a financial economic theory of punitive damages. The core problem, as the Supreme Court acknowledged in Exxon Shipping Co. v. Baker, is not the systemic amount of punitive damages in the tort system; rather it is the risk of outlier outcomes. Low frequency, high severity awards are unpredictable, cause financial distress, and beget social cost. By focusing only on offsetting escaped liability, the standard law and economics theory fails to account for the core problem of variance. This Article provides a risk arbitrage analysis of the relationship between variance, litigation valuation, and optimal deterrence. Starting with settlement …

The Economic Treatment Of Automobile Injuries, Alfred F. Conard

Michigan Law Review

The automobile has changed more than Americans' ways of transportation. It has changed their ways of housing, of working and playing, of eating, living, and loving. It has also added to their ways of suffering and dying.

The suffering and dying have called forth two kinds of treatment. The better recognized kind is medical treatment, which staves off death and minimizes pain and disability among the living. The less recognized kind of treatment is economic-the restoration to the injury victim or to his dependents of some part of the economic wellbeing that has been snatched away from them by loss …