Reporter's Privilege and Incentives to Leak

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.

Law, Economics, and the Burden(s) of Proof

“…Under this approach, the fact-finder's role is tantamount to a welfare-minded social planner, using adduced evidence to learn and make decisions within an information-constrained environment. The evidence produced in a case enables an uncertain fact-finder to "update" her assessment of the case (possibly in a Bayesian manner) in light of that evidence (Feess et al 2009).…”

“…17 Having observed evidence x, the fact-finder can update its assessment in any number of ways. Perhaps the most intuitive updating process might be Bayes rule (e.g., Feess et al 2009), under which the fact-finder uses the evidence observed to generate a posterior conditional probability density on the defendant's actual behavior, | , . (Note that so long as v and x are not completely statistically independent of one another, the evidence represented by x is statistically "probative," so that this updated density will generally not…”

Libel Bullies, Defamation Victims, and Litigation Incentives

“…Other economic models of libel law discuss the media's incentives to invest in the accuracy of the evidence that their story is based on (Bar-Gill and Hamdani (2003) and Dalvi and Refalo (2008)), anonymous sources' incentives to leak stories to journalists under different burdens of proof for the journalist (Baum, Feess, and Wohlschlegel (2009)), and voters' reactions to corrupt politicians exposed by the media (Gratton (2015)). None of these papers studies litigation incentives and their relation to wrongdoing and publication incentives, or the impact of the observability of a public figure's litigation history on these issues.…”