Punitive damages are awarded to punish especially culpable conduct and deter others, in addition to compensation for actual losses. They are rare, highly variable and constrained by caps and constitutional limits.
They add a long right tail to the outcome distribution of a case. A small share of matters carry large punitive awards, and most carry none. Treating them as an average inflates expected value.
Courts and legislatures limit them. Caps, ratio guidelines and standards of proof differ by jurisdiction, and awards are frequently reduced post-trial or on appeal.
Punitive damages are not the measure of a case's value. They are a possibility whose likelihood and size must be modeled as a distribution.
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