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Suppose that an injurer causes $50,000 in harm to a victim, but only faces a 25% chance of being found liable. In order for the
Suppose that an injurer causes $50,000 in harm to a victim, but only faces a 25% chance of being found liable. In order for the injurer to face the proper incentives to exercise the correct level of precaution 1. What is the appropriate size for compensatory damages? $ 50,000 V 2. What is the optimal size for punitive damages? $ 12,500 V Suppose instead the injurer is found liable 80% of the time. Now, 3. What is the appropriate size for compensatory damages? $ 12,500 V 4. What is the optimal size for punitive damages? $ 0 v
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