Dollars for Days: An Empirical Assessment of Per Diem and Anchoring Arguments

Abstract

Seeking to address concerns about runaway jury awards and bias more generally, states have limited what plaintiffs’ attorneys can and cannot argue to support their claims for non-economic damages. Our 50-state survey finds that states fall roughly into four regimes. Some states allow plaintiffs to demand a lump sum award (i.e. provide an anchor) that is supported by time units (e.g. minutes of pain and suffering). Arguments based on units of time are known as per diem arguments. Some states allow lump sum demands but not per diem arguments. Other states have precisely the opposite rule, and still others prohibit both lump sum demands and per diem arguments. Each regime is purportedly justified by assumptions about how lump sum and per diem calculations will impact a jury. For example, some courts suggest that per diem calculations will give jurors a false sense that damages are certain, and this will result in runaway awards. Other courts state that per diem calculations are a fair way to provide jurors some guidance when deciding a very difficult issue. Similar arguments are made for and against lump sum awards. But no court roots its presumptions in data.This article fills a void in the scholarly literature to inform policy and guide advocates. In this article, we describe our 2x2 between-subjects experimental method, its limitations and our results. We found that anchoring has a large impact on damages and was far more effective than per diem arguments in increasing damages. Surprisingly, per diem arguments also increased plaintiff win rates. We discuss the implications.