Legal Research Of China’s Punitive Damages System From The Perspective Of Game Theory

The first appearance of punitive damages in China is in the “Law of the People’sRepublic of China Consumer Protection Law”. The item of “Two timescompensation” was wildly used in consumers protection. Entering the21stcentury,development of cultural and moral was not as good as that of economics. In the caseof imperfect institution building, food safety problems were happened frequently inChina. Especially in2008, the incident of Sanlu (milk powder was found to containmelamine) caused an uproar among consumers. There were increasing calls of the useof punitive damages in punishing wrongful manufacture. In the2012NationalPeople’s Congress meeting, the modification of Consumer Protection Law has beenincluded in the legislative plan and the NPC law Committee’s annual work plans. OnApril25th,2013,“Consumer Protection Law Amendment (Draft)”, submitted to the12thNPC Standing Committee at its second meeting, made changes on punitivedamages. However, compared to the United States’ limitation of the application ofhigh punitive damages, domestic calls should cause us to think deeply of the issue.In this context, the paper conducts investigation of punitive damages. In order todetermine the core function of punitive damages is prevention function, this articlecomprehensively studies the developing progress of this system and its use indifferent legal systems. Using Game Theory tools to explore the mechanisms ofpunitive damages to prove it is a more influential factor on the behavior ofmanufactures and consumers. Summers shortcomings of China’s punitive damagessystem and finally puts forwards suggestions for improving these problems.