I remember a recent mock trial where a jury reached the point of considering damages, and one juror threw out a number to start the discussion: “Let’s just say five million.” When another juror challenged the basis for that, “Why five million?” the first juror responded, “It’s just a nice round number.” And that sentiment does indeed reflect a tendency among jurors to anchor on something simple and memorable like a round number. But there is also a countervailing tendency: numbers that are less round and more specific can imply a precision that adds credibility to the number and makes for an even more effective anchor.

The implied precision of a more specific number is supported by recent research. Michael Conklin, Angelo State University Professor in business law (Conklin, 2020) created a research project building on the general anchoring effect (the effect of suggested numbers in driving the ultimate result) as well as a precision effect observed in contexts like car price negotiations, eBay transactions, and estimates of basketball players’ field goal percentages. Conklin wanted to see if more precise numbers had more credibility and influence. Looking at ad damnum requests for punitive damages by plaintiffs in a case involving a failure to recall a defective water heater, Conklin tested scenarios with the plaintiff asking for round numbers or more specific numbers. The more precise numbers won out, resulting in higher awards even when the specific number requested was actually lower than the round number. In this post, I’ll discuss that study as well as its implications for civil litigators picking an anchor number for damages.

The Research

Professor Conklin chose to look at punitive damages based on the inherent subjectivity of the category. Focusing on a scenario where a manufacturer had already been found liable for a customer injury based on a water heater defect, the scenario asked respondents to recommend a punitive damage amount based on the company knowing about the defect but failing to recall the product. Testing what is, these days, a relatively low ask of $500,000, research participants received a scenario that included that round number, or a more precise number that was $3,000 lower or higher ($497,000 or $503,000).

The lowest number requested, $497,000, returned a mean award of $387,274, while the slightly higher ask of $503,000 resulted in a mean award of $377,108.  When the round number of $500,000 was requested, the mean award was $359,370. These may not be massive differences, but in proportion to the ask, the difference is considerable. It is also noteworthy that asking for $3,000 less in damages resulted in average awards that were nearly $30,000 more in actual damages.

The research theorizes that this is due to the implied precision effect: “Precise numerical expressions imply a greater level of knowledge than round numerical expressions. This causes recipients to believe that precise numerical expressions are more informative of the true value of the item being negotiated, regardless of whether they actually are.”

The Implications

This study is an example of practical social science that can guide practice. Here are the takeaways.

Plaintiffs, Use More Precise Anchors

If you are throwing out an ad damnum request for damages, consider making that number as specific as it can reasonably be. Jurors are susceptible to the implied precision effect and may assume that when a specific number is used, there must be more knowledge behind it. While this effect was tested in the context of punitive damages, logically the effect should apply in other subjective damage categories as well, such as non-economic damages relating to loss or to pain and suffering.

Defendants, You Might Use Them as Well 

The study focuses on plaintiff requests, but the research on anchoring also indicates that defendants benefit from anchors as well, and if a precise number is a more credible and influential number, then this should benefit the defense as well. In particular, if plaintiffs are throwing out nice round numbers in the categories (perhaps thinking those numbers will be simpler and more memorable), then the defense might have an advantage in countering with more precise numbers, and thereby conveying that there is more legitimacy to the defense numbers.

But Ground Them If You Can

The research shows that the anchoring effect works even when the anchor is arbitrary: In a classic study, Tversky & Kahneman (1974) had participants spin a number wheel prior to making an estimate on the number of countries in Africa, and found that higher results on the wheel led to higher estimates. But even as arbitrary numbers can anchor, it is also true that grounded anchors are more effective than arbitrary ones, and this should be even more true in a litigation context where jurors are given instructions not to speculate. Also, what wasn’t tested in the current study was the defense contesting the anchor. If the anchor is arbitrary, and the other side is able to criticize it, then a more precise number might look even more arbitrary. While it isn’t always allowed depending on the venue, if counsel can provide a basis for the more precise number, that is likely to be more influential:

The decision on what to award is yours alone, but if you do find yourself looking for a guide, then one way of looking at it might be this: Ask yourself what this company was willing to spend to market this product, and based on the testimony, twice the marketing budget for the year this incident happened ends up being $497,328. That amount might be the right message. 

Conklin, M. (2020). Precise Punishment: Why Precise Punitive Damage Requests Result in Higher Awards Than Round Requests. Mich. Bus. & Entrepreneurial L. Rev., 10, 179.

Image credit: Shutterstock, used under license. Thanks to Josh Haby (Persuasion Strategies) for research that contributed to the post.