The Optimal Standard of Proof with Adjudication Avoidance
7 Pages Posted: 4 Dec 2018 Last revised: 6 Dec 2018
Date Written: December 3, 2018
Actors, whether guilty or innocent, may invest in costly measures to reduce their likelihood of being audited. The value of these investments are increasing in the probability with which they expect to be found guilty conditional on being audited. Because strengthening the standard of proof reduces the probability of conviction, it also reduces the investments by actors to reduce their likelihood of being audited. Therefore, when balancing such avoidance costs and deterrence effects, it is optimal to employ a stronger standard than that which maximizes deterrence, namely stronger than preponderance of the evidence.
Keywords: Standard of proof, avoidance, audit, deterrence, evidence, judicial error.
JEL Classification: K00, K14, K42.
Suggested Citation: Suggested Citation