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

33 Pages Posted: 22 Jun 2011 Last revised: 15 Apr 2015

See all articles by Eyal Zamir

Eyal Zamir

Hebrew University of Jerusalem - Faculty of Law

Ilana Ritov

Hebrew University of Jerusalem - School of Education

Multiple version iconThere are 2 versions of this paper

Date Written: June 20, 2011

Abstract

The basic rule in civil litigation is that the plaintiff carries the burden of proof and the general standard of proof is preponderance of the evidence. The plaintiff prevails if she establishes her case with a probability exceeding 0.5. Drawing on insights from behavioral economics and new experimental findings, this paper makes the following arguments:

1. Since litigants tend to take the status quo as the pertinent reference point, erroneous dismissal of a claim is likely to be perceived as denying the plaintiff deserved gains, and erroneous acceptance of a claim perceived as inflicting undeserved losses on the defendant. Loss aversion thus provides a powerful justification for placing the burden of proof on the plaintiff;

2. Notwithstanding the formal rule, behavioral insights and experimental findings lend support to the hypothesis that the actual standard of proof in civil litigation is higher than 51%. This phenomenon is likely due to factfinders' omission bias. Burden of proof is not a mere tiebreaker; it sets a reference point and creates a default effect;

3. Ceteris paribus, to minimize the total costs of erroneous judicial decisions, loss aversion calls for setting the standard of proof considerably higher than 51%. While conflicting considerations militate against this proposal, this factor should not be overlooked.

Keywords: loss aversion, omission bias, behavioral law and economics, prospect theory, evidence law, burden of proof, standard of proof, civil litigation

JEL Classification: K40, K41

Suggested Citation

Zamir, Eyal and Ritov, Ilana, Loss Aversion, Omission Bias, and the Burden of Proof in Civil Litigation (June 20, 2011). Available at SSRN: https://ssrn.com/abstract=1868465 or http://dx.doi.org/10.2139/ssrn.1868465

Eyal Zamir (Contact Author)

Hebrew University of Jerusalem - Faculty of Law ( email )

Mount Scopus
Mount Scopus, IL 91905
Israel
+972 2 582 3845 (Phone)
+972 2 582 9002 (Fax)

Ilana Ritov

Hebrew University of Jerusalem - School of Education ( email )

Mt. Scopus
Jerusalem, 91905
Israel
+972 2 652 9929 (Phone)

HOME PAGE: http://pluto.huji.ac.il/~msiritov/ilana_ritov.htm

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