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Reporter's Privilege and Incentives to Leak

Author

Listed:
  • Baum Ido

    (College of Management School of Law, Rishon Le Zion, Israel)

  • Feess Eberhard

    (Frankfurt School of Finance & Management, Germany)

  • Wohlschlegel Ansgar

    (University of Bonn, Germany)

Abstract

Journalists sued for defamation may refuse to reveal their anonymous sources. To escape liability under the traditional English rule, they then need to show proof that the news is correct. By contrast, many US states have switched the burden of proof such that plaintiffs must first present evidence that the news is false. Focusing on the incentives of sources to leak, we find that the American rule reduces the frequency of type I errors (true stories are not learned by the society) at the expense of a higher frequency of type II errors (the society believes wrong stories). The American rule is superior when courts are likely to find the truth without knowing the identity of sources, and when firms can severely punish even honest sources. Furthermore, when courts rule that sources must be revealed, they should ensure a higher compliance rate of journalists under the American rule.

Suggested Citation

  • Baum Ido & Feess Eberhard & Wohlschlegel Ansgar, 2009. "Reporter's Privilege and Incentives to Leak," Review of Law & Economics, De Gruyter, vol. 5(1), pages 701-715, November.
    • Handle: RePEc:bpj:rlecon:v:5:y:2009:i:1:n:28
    DOI: 10.2202/1555-5879.1367
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    References listed on IDEAS

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    Cited by:

    1. David J. Acheson & Ansgar Wohlschlegel, 2021. "Libel Bullies, Defamation Victims, and Litigation Incentives," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 177(2), pages 135-166.

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