Dishonesty and Libel Law: The Economics of the "Chilling" Effect
In this paper we primarily address the implications of the tort of defamation for the potential "chilling" effect by which the media are discouraged from exposing economic and political misdeeds. We argue that, in general, both the sanction for dishonesty and the compensation for defamation should not be too high. In terms of the model presented, the evidence seems to indicate that increasing the plaintiff's probability of winning is not a problem if the media are able to distinguish honesty from dishonesty (even if imperfectly), whereas it becomes welfare diminishing when that is not possible.
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Volume (Year): 155 (1999)
Issue (Month): 2 (June)
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