The costs and benefits of letting juries punish corporations: comment on Viscusi.

• Author: MacCoun, Robert J.
• Position: Response to article by W. Kip Viscusi in this issue, p. 547

On the basis of a new survey-administered mock juror experiment, Kip Viscusi suggests that a corporate defendant "[u]ndertaking even a sound risk analysis in line with that used by government regulators" actually increases the magnitude of punitive damage verdicts, even when the corporation's analysis "may have struck an appropriate risk-cost balance."(1) This finding should not surprise us in light of the tremendous controversy that followed the revelation that on the basis of a benefit-cost analysis, the Ford Motor Company decided against an eleven dollar safety alteration in each Ford Pinto, despite their anticipation that this could prevent almost two hundred burn deaths.(2)

Thus, for the purposes of this brief comment I take Viscusi's empirical findings--in particular, the finding that punitive awards were larger in the versions of the case where a corporate risk analysis was conducted--at face value, and grant for the sake of argument that they might describe actual juror judgments in similar cases, absent any countervailing influences at trial.(3) Instead, in this brief comment I discuss the need to disentangle several plausible explanations for his results (which are not mutually exclusive) and their implications for legal policy. Some support Viscusi's contention(4) that the punitive awards process is vulnerable to systematic cognitive bias; others suggest a more fundamental clash of values between the normative framework of risk analysis and lay intuitions of justice and blameworthiness.

1. HINDSIGHT BIAS

   Viscusi suggests that his findings are yet another manifestation of a hindsight bias in legal judgment.(5) In brief, the hindsight bias is the tendency to overestimate the ex ante predictability of an outcome, after one learns it has already occurred; it is the exaggerated sense that one did (or would have) "known it all along."(6) Recent experiments have implicated the hindsight bias in citizens' ex post evaluations of police searches, criminal verdicts, and negligence and punitive damage judgments in tort litigation.(7)

   If in fact the hindsight bias explains Viscusi's results--in the sense that they reflect an artifact of ex post judgment--it is not clear how we might mitigate the effect. Laboratory attempts to "debias" ex post judgments have been mostly unsuccessful, and prospects for debiasing at trial aren't encouraging;(8) although there is some evidence that the defense can reduce hindsight bias during closing arguments.(9) Instead, Viscusi's preferred solution is to curtail greatly the jury's involvement in punitive and other civil judgments.(10) The most likely alternative is the bench verdict. In an earlier paper, Viscusi and coauthor Reid Hastie present evidence suggesting that judges are less susceptible than juries to hindsight bias.(11) But at least two studies have demonstrated hindsight bias in judgments by professional judges,(12) and there are three reasons to doubt the claim that they are less vulnerable than juries. First, simulation experiments of this sort are suitable for demonstrating the existence of a judgment bias, but inappropriate for estimating its magnitude in actual trials. Second, Richard Lempert argues that the Hastie and Viscusi data, considered in their entirety, actually show roughly comparable hindsight biases for judges and jurors., once various methodological differences between the judge and juror research protocols are taken into consideration.(13) And third, all three studies compare judges to individual jurors, not juries, yet groups have been shown to be somewhat less susceptible than individuals to hindsight bias.(14) If so, any slight advantage of judges over individual jurors might be offset by deliberation.(15)

   But at the risk of sounding academically territorial, it is not clear that Viscusi's results are due to hindsight bias as psychologists use the term. Viscusi argues that ex post, jurors compare the value of the human life that was lost in the accident to the relatively trivial amount that could have been spent making a safety improvement for the particular vehicle in the accident.(16) Viscusi presents no direct evidence that his respondents made such a comparison, but the hypothesis is plausible, and such a comparison would indeed be misleading, unreasonable, and unfair to the defendant. But this isn't the same "hindsight bias" that was examined in those studies claiming that hindsight bias is difficult to debias.(17) Strictly speaking, the hindsight bias occurs when, after learning of an outcome, one overestimates the probability one would have assigned to that outcome ex ante.(18) Operationally, a hindsight bias is demonstrated by comparing the likelihood judgments of perceivers before versus after receiving outcome information. But in Viscusi's experiment, the outcome was held constant, available to all of his participants. And he presents no evidence that his respondents in the risk analysis conditions perceived a greater accident probability than those in the control conditions.

   What Viscusi did vary was the basis for the corporate decision to forego extra spending on safety measures...