common-law
Does expected value bear upon the calculation of compensatory damages?
<p>Suppose I am given a lottery ticket. This ticket has a 1 in 1000 chance of winning me one million dollars, and will otherwise be worth nothing.</p>

<p>Before I can see whether I've won, some guy comes along and destroys the ticket. There is no way to buy a replacement, and no way of knowing whether the ticket would have paid out or not.</p>

<p>The expected value of the ticket is clearly 1e6/1e3 = one thousand dollars. My question is, would the court do that math and award me one thousand dollars? It's extremely unlikely that I've suffered any actual loss, so obviously I can't recover a million bucks in speculative damages from the guy; and yet $0 in damages hardly seems fair.</p>

<p>In other words: If the actual value of my loss cannot be determined with certainty, yet the statistically expected value of the loss can be, can I recover the expected damages?</p>

<p>Bonus question: Suppose instead of the ticket being a gift, I had paid $500 for it, or $2000. (Remember, I can't buy another one.) Would either situation change the result?</p>

<h1>Sort of.</h1>
<p>In this instance, it doesn't seem that the damages awarded (if any) would be <a href="http://en.wikipedia.org/wiki/Damages#Compensatory_or_expectation_damages" rel="nofollow noreferrer">compensatory damages</a>, but <a href="http://en.wikipedia.org/wiki/Damages#Speculative_damages" rel="nofollow noreferrer">speculative damages</a>. <a href="http://www.law.cornell.edu/wex/speculative_damages" rel="nofollow noreferrer">A good definition is</a></p>
<blockquote>
<p>Possible financial loss or expenses claimed by a plaintiff that are contingent upon a future occurrence, purely conjectural, or highly improbable. These damages should not be awarded. For example, a plaintiff may claim that in ten years, as he ages, he may begin to feel pain from a healed fracture caused by a defendant (even though no doctor has testified this is likely to happen), and should therefore recover money from the defendant now.</p>
</blockquote>
<p>In order to be awarded compensation, a plaintiff <em>must</em> prove that there is a high likelihood that the future event would occur. The required likelihood may be subjective, in part because it is hard to estimate the odds of many claims. In the situation given here, there is a 0.1% chance of a payoff. That is most likely far too low to be considered likely.</p>
<p>Now, if the plaintiff argued for <a href="http://www.law.cornell.edu/wex/actual_damages" rel="nofollow noreferrer">compensatory damages</a>, then s/he might receive an amount of money equivalent to the price of one lottery ticket - or the same ticket back. Assuming the original ticket is destroyed, the odds are the same (and even if it is not destroyed, the odds change by only a tiny amount); the same thing happens if the original ticket is returned, instead. The plaintiff has not lost any chance to win the million dollars.</p>
<p>Bonus question: If you paid $500 or $2,000 dollars and wanted to be awarded compensatory damages, you might receive those sums of money. If you wanted to be awarded speculative damages, you would most likely receive nothing, because the odds are the same.</p>
