Law & Economics Working Papers
When people make moral or legal judgments in isolation, they produce a pattern of outcomes that they would themselves reject, if only they could see that pattern as a whole. A major reason is that human thinking is category-bound. When people see a case in isolation, they spontaneously compare it to other cases that are mainly drawn from the same category of harms. When people are required to compare cases that involve different kinds of harms, judgments that appear sensible when the problems are considered separately often appear incoherent and arbitrary in the broader context. Another major source of incoherence is what we call the translation problem: The translation of moral judgments into the relevant metrics of dollars and years is not grounded in either principle or intuition, and produces large differences among people.. The incoherence produced by category-bound thinking is illustrated by an experimental study of punitive damages and contingent valuation. We also show how category-bound thinking and the translation problem combine to produce anomalies in administrative penalties. The underlying phenomena have large implications for many topics in law, including jury behavior, the valuation of public goods, punitive damages, criminal sentencing, and civil fines. We consider institutional reforms that might overcome the problem of predictably incoherent judgments. Connections are also drawn to several issues in legal theory, including valuation of life, incommensurability, and the aspiration to global coherence in adjudication.
Cass R. Sunstein, Daniel Kahneman, David Schkade & Ilana Ritov, "Predictably Incoherent Judgments" (John M. Olin Program in Law and Economics Working Paper No. 131, 2001).