Document Type

Working Paper

Publication Date

9-16-2019

SSRN Discipline

PSN Subject Matter eJournals; Legal Anthropology eJournals; LSN Subject Matter eJournals; ERN Subject Matter eJournals; Law School Research Papers - Law & Economics; Economics Research Network; Legal Scholarship Network; Microeconomic Theory eJournals; Law School Research Papers - Legal Studies; Law & Society eJournals; Law & Society: Private Law eJournals; Law & Society: Public Law eJournals; AARN Subject Matter eJournals; Political Science Network; Anthropology & Archaeology Research Network

Abstract

We analyze the regulation of false statements in the presence of Bayesian audiences We find that a Often moderate sanctions are optimal even though strict sanctions can fully deter all false statements b the existence of separating equilibria"”where only truthful statements are made"”critically depends on judicial accuracy c the magnitude of sanctions tradesoff false information chilling of truthful statements and litigation costs and d private enforcement often dominates public enforcement despite the lack of commitment We emphasize the case of defamation law and discuss other contexts including securities regulation whistleblower incentives jury trials and reports of criminal activity

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