Unjust Reversals

UNJUST REVERSALS

There is good reason to believe that the administration of justice is infected by predictable incoherence in several domains. The evidence is drawn in part from experiments, including studies of mock juries, and in part from observation of patterns in legislation, regulation, and litigation.

In one experiment, mock jurors recruited from jury rolls in Texas were asked to assess punitive damages in several civil cases. The cases came in pairs, each consisting of one claim for physical injury and one for financial loss. The mock jurors first assessed one of the scenarios and then they were shown the case with which it was paired and were asked to compare the two. The following are summaries of one pair of cases:

• Case 1: A child suffered moderate burns when his pajamas caught fire as he was playing with matches. The firm that produced the pajamas had not made them adequately fire resistant.
• Case 2: The unscrupulous dealings of a bank caused another bank a loss of $10 million.

Half of the participants judged case 1 first (in single evaluation) before comparing the two cases in joint evaluation. The sequence was reversed for the other participants. In single evaluation, the jurors awarded higher punitive damages to the defrauded bank than to the burned child, presumably because the size of the financial loss provided a high anchor.

When the cases were considered together, however, sympathy for the individual victim prevailed over the anchoring effect and the jurors increased the award to the child to surpass the award to the bank. Averaging over several such pairs of cases, awards to victims of personal injury were more than twice as large in joint than in single evaluation. The jurors who saw the case of the burned child on its own made an offer that matched the intensity of their feelings. They could not anticipate that the award to the child would appear inadequate in the context of a large award to a financial institution. In joint evaluation, the punitive award to the bank remained anchored on the loss it had sustained, but the award to the burned child increased, reflecting the outrage evoked by negligence that causes injury to a child.

As we have seen, rationality is generally served by broader and more comprehensive frames, and joint evaluation is obviously broader than single evaluation. Of course, you should be wary of joint evaluation when someone who controls what you see has a vested interest in what you choose. Salespeople quickly learn that manipulation of the context in which customers see a good can profoundly influence preferences. Except for such cases of deliberate manipulation, there is a presumption that the comparative judgment, which necessarily involves System 2, is more likely to be stable than single evaluations, which often reflect the intensity of emotional responses of System 1. We would expect that any institution that wishes to elicit thoughtful judgments would seek to provide the judges with a broad context for the assessments of individual cases. I was surprised by Cass Sunstein’s account of restrictions on jurors considering other cases when assessing punitive damages. In the setting he described, the procedure favored single evaluation over the broader comparison I would have expected.

In another study of incoherence in the legal system, Sunstein compared the administrative punishments that can be imposed by different U.S. government agencies including the Occupational Safety and Health Administration and the Environmental Protection Agency. He concluded that “within categories, penalties seem extremely sensible, at least in the sense that the more serious harms are punished more severely. For occupational safety and health violations, the largest penalties are for repeated violations, the next largest for violations that are both willful and serious, and the least serious for failures to engage in the requisite record-keeping.” It should not surprise you, however, that the size of penalties varied greatly across agencies, in a manner that reflected politics and history more than any global concern for fairness. In the historical comparison discussed here, the fine for a “serious violation” of worker-safety regulations was capped at $7,000, while a violation of the Wild Bird Conservation Act could result in a fine of up to $25,000. The fines are sensible in the context of other penalties set by each agency, but they appear odd when compared to each other. The contrast becomes visible when the two cases are considered within the same frame. The system of administrative penalties is coherent within agencies but incoherent globally.