TY  - JOUR
AU  - Polinsky,A. Mitchell
AU  - Rubinfeld,Daniel L.
TI  - A Damage-Revelation Rationale for Coupon Remedies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11227
PY  - 2005
Y2  - March 2005
UR  - http://www.nber.org/papers/w11227
L1  - http://www.nber.org/papers/w11227.pdf
N1  - Author contact info:
A. Mitchell Polinsky
Stanford Law School
Stanford University
Stanford, CA  94305
Tel: 650/723-0886
Fax: 650/723-3557
E-Mail: polinsky@stanford.edu

Daniel L. Rubinfeld
Robert L. Bridges Professor of Law and
Professor of Economics Emeritus
788 Simon Tower, Boalt Hall
University of California, Berkeley
Berkeley, CA 94720
Tel: 510/642-1959
Fax: 510/642-3767
E-Mail: drubinfeld@law.berkeley.edu
AB  - 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.
ER  -