The Distortionary Effect of Evidence on Primary Behavior
31 Pages Posted: 13 Mar 2010 Last revised: 4 Sep 2014
Date Written: July 30, 2010
In this essay, we analyze how evidentiary concerns dominate actors’ behavior. Our findings offer an important refinement to the conventional wisdom in law and economics literature, which assumes that legal rules can always be fashioned to achieve socially optimal outcomes. We show that evidentiary motivations will often lead actors to engage in socially suboptimal behavior when doing so is likely to increase their likelihood of prevailing in court. Because adjudicators must base decisions on observable and verifiable information - or, in short, evidence - rational actors will always strive to generate evidence that can later be presented in court and increase their chances of winning the case regardless of the cost they impose on third parties and society at large. Accordingly, doctors and medical institutions will often refer patients to undertake unnecessary and even harmful examinations just to create a record that they went beyond the call of duty in treating them. Owners of land and intellectual property may let harmful activities continue much longer than necessary just to gather stronger evidence concerning the harm they suffer. And even the police will often choose to allow offenders to carry out crimes in order to improve the chance of a conviction. The effect we identify is pervasive. It can be found in virtually all areas of the law.
Furthermore, there is no easy way to eliminate or correct it. It should be noted, however, that the evidentiary phenomenon we discuss also has a positive side effect: it reduces adjudication costs for judges and juries and improves the accuracy of court processes. In some cases, this improvement will exceed the social cost stemming from actors’ suboptimal behavior. In other contexts, however, the social cost will far outweigh the benefit.
Keywords: suboptimal behavior, creation and preservation of evidence, social costs, adjudication costs, law and economics, psychology, proof of facts, damages, preserving proof, incentives of proof, decisionmaking
JEL Classification: D63, K10, K40
Suggested Citation: Suggested Citation