Time is Money: An Empirical Assessment of Non-Economic Damages Arguments

Abstract

Non-economic damages (pain and suffering) are the most significant and variable components of liability. Our survey of fifty-one U.S. jurisdictions shows wide heterogeneity in whether attorneys may quantify damages as time-units of suffering (per diem) or demand a specific amount (lump sum). Either sort of large number could exploit an irrational anchoring effect. We performed a realistic, online, video-based experiment with 732 human subjects. We replicated prior work showing that large lump sum demands drive larger jury verdicts, but surprisingly found no effect of similarly-sized per diem anchors. We did find per diem effects on binary liability outcomes, and thus expected case values, and we discuss potential causal mechanisms, based in the cognitive science literature. This empirical work contradicts the speculations by scholars and courts that per diem arguments powerfully impact damage awards by exploiting juror irrationality. Nonetheless, our data surprisingly shows per diem arguments enhancing the expected value of cases by increasing win rates, perhaps because they allow plaintiffs to explain the basis for a large request. This latter dynamic would not seem to justify the proscription currently employed in some jurisdictions