Class Action Lawsuits and Lawyers

Such effectiveness has not been demonstrated, however. One key issue is the relationship between actual costs to victims and the liability costs that are faced by injurers. In a situation in which potential injurers anticipate paying an extra dollar for every additional dollar of injuries or transaction costs they cause, they have the right incentive to take cost-effective steps to reduce future costs. However, potential injurers may expect to pay more or less than one extra dollar in liability for each additional dollar of social costs they cause.
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Attorneys and Legal Information

(14) The author of the study posited two arguments to explain the lack of an effect: that punitive damages are awarded too randomly to influence behavior, and that federal regulations and market forces other than liability are stringent enough to leave no room for additional deterrence. However, two follow-up papers suggested that the statistical results of that study could merely reflect limitations of the data.
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