A Damage-Revelation Rationale for Coupon Remedies / A. Mitchell Polinsky, Daniel L. Rubinfeld.

Format:

Book

Author/Creator:

Polinsky, A. Mitchell.

Contributor:

National Bureau of Economic Research.

Rubinfeld, Daniel L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11227.

NBER working paper series no. w11227

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

This article studies optimal remedies in a setting in which damages vary among plaintiffs and are difficult to determine. We show that giving plaintiffs a choice between cash and coupons to purchase units of the defendant's product at a discount -- a "coupon-cash remedy" -- is superior to cash alone. The optimal coupon-cash remedy offers a cash amount that is less than the value of the coupons to plaintiffs who suffer relatively high harm. Such a remedy induces these plaintiffs to choose coupons, and plaintiffs who suffer relatively low harm to choose cash. Sorting plaintiffs in this way leads to better deterrence because the costs borne by defendants (the cash payments and the cost of providing coupons) more closely approximate the harms that they have caused.

Notes:

Print version record

March 2005.