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Loss Aversion, Omission Bias, and the Burden of Proof in Civil Litigation

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  • Eyal Zamir
  • Ilana Ritov

Abstract

The general standard of proof in civil litigation is preponderance of the evidence. To prevail, the plaintiff must establish the case with a probability exceeding .5. We argue that since litigants tend to take the status quo as the reference point, dismissal of a claim is likely to be perceived as denying the plaintiff gains, and acceptance of a claim is likely to be perceived as inflicting losses on the defendant. Loss aversion thus justifies placing the burden of proof on the plaintiff. Notwithstanding the formal rule, our experimental findings suggest that the actual standard of proof in civil litigation is most likely higher than 51 percent. This phenomenon is plausibly due to fact finders' omission bias. To minimize the total costs of judicial errors, loss aversion calls for setting the standard of proof considerably higher than 51 percent. Conflicting considerations militate against this proposal, however.

Suggested Citation

  • Eyal Zamir & Ilana Ritov, 2012. "Loss Aversion, Omission Bias, and the Burden of Proof in Civil Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 41(1), pages 165-207.
  • Handle: RePEc:ucp:jlstud:doi:10.1086/664911
    DOI: 10.1086/664911
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    Cited by:

    1. Subhasish M. Chowdhury & Joo Young Jeon & Abhijit Ramalingam, 2018. "Property Rights And Loss Aversion In Contests," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1492-1511, July.
    2. Shay Lavie & Tal Ganor & Yuval Feldman, 2020. "Adjusting legal standards," European Journal of Law and Economics, Springer, vol. 49(1), pages 33-53, February.
    3. Grünhagen, Marko & Zheng, Xu (Vivian) & Wang, Jeff Jianfeng, 2017. "When the Music Stops Playing: Post-litigation Relationship Dissolution in Franchising," Journal of Retailing, Elsevier, vol. 93(2), pages 138-153.
    4. Christoph Engel & Keren Weinshall, 2020. "Manna from Heaven for Judges– Judges’ Reaction to a Quasi-Random Reduction in Caseload," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2020_01, Max Planck Institute for Research on Collective Goods.
    5. Argenton, Cedric & Wang, Xiaoyu, 2020. "Litigation and Settlement under Loss Aversion," Discussion Paper 2020-002, Tilburg University, Tilburg Law and Economic Center.
    6. Thorsten Chmura & Christoph Engel & Markus Englerth, 2013. "Selfishness As a Potential Cause of Crime. A Prison Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2013_05, Max Planck Institute for Research on Collective Goods.
    7. Christoph Engel, 2013. "Behavioral Law and Economics: Empirical Methods," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2013_01, Max Planck Institute for Research on Collective Goods.
    8. Argenton, Cedric & Wang, Xiaoyu, 2020. "Litigation and Settlement under Loss Aversion," Other publications TiSEM 3a267c4a-2f7d-41c9-966b-e, Tilburg University, School of Economics and Management.
    9. Argenton, Cedric & Wang, Xiaoyu, 2020. "Litigation and Settlement under Loss Aversion," Other publications TiSEM b6c48abc-9b47-4c3b-848b-3, Tilburg University, School of Economics and Management.
    10. Mark Schweizer, 2013. "The civil standard of proof – what is it, actually?," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2013_12, Max Planck Institute for Research on Collective Goods.

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