In response to concerns that jury awards in tort cases are excessive and unpredictable, nearly every state legislature has enacted some version of tort reform that is intended to curb extravagant damage awards. One of the most important and controversial reforms involves capping (or limiting) the maximum punitive damage award. We conducted a jury analogue study to assess the impact of this reform. In particular, we examined the possibility that capping punitive awards would cause jurors to inflate their compensatory awards to satisfy their desires to punish the defendant, particularly in situations where the defendant's conduct was highly reprehensible. Relative to a condition in which punitive damages were unlimited, caps on punitive damages did not result in inflation of compensatory awards. However, jurors who had no option to award punitive damages assessed compensatory damages at a significantly higher level than did jurors who had the opportunity to do so. We discuss the policy implications of these findings. THE EFFECTS OF LIMITING PUNITIVE DAMAGE AWARDSCries for reform first sounded in the 1970s and continue to the present day. The target of this attack is a tort liability system that many people (including insurance, medical, and pharmaceutical executives as well as legislators and judges) perceive as capricious, unpredictable, and out of control (see, e.g., Chookaszian, 1997;Ellis, 1989;Parliman & Shoeman, 1994). Much of the criticism centers on concerns about the perceived excessiveness and unpredictability of jury damage awards. This uncertainty is generally believed to produce inefficiency in terms of businesses' planning for risk-producing activities and in predicting the outcome of a case and negotiating a settlement (Baldus, MacQueen, & Woodworth, 1995).