Regulating Information with Bayesian Audiences

31 Pages Posted: 16 Sep 2019 Last revised: 11 Jan 2020

See all articles by Yonathan A. Arbel

Yonathan A. Arbel

University of Alabama - School of Law

Murat C. Mungan

George Mason University - Antonin Scalia Law School, Faculty

Date Written: September 12, 2019

Abstract

We analyze the regulation of false statements in the presence of Bayesian audiences. We find that: (a) Often, moderate sanctions are optimal even though strict sanctions can fully deter all false statements; (b) the existence of separating equilibria—where only truthful statements are made—critically depends on judicial accuracy; (c) the magnitude of sanctions trades-off false information, chilling of truthful statements, and litigation costs; and (d) private enforcement often dominates public enforcement despite the lack of commitment. We emphasize the case of defamation law and discuss other contexts including securities regulation, whistle-blower incentives, jury trials, and reports of criminal activity.

Keywords: information regulation, defamation, disclosure

Suggested Citation

Arbel, Yonathan A. and Mungan, Murat C., Regulating Information with Bayesian Audiences (September 12, 2019). U of Alabama Legal Studies Research Paper No. 3452662, George Mason Law & Economics Research Paper 19-28, Available at SSRN: https://ssrn.com/abstract=3452662 or http://dx.doi.org/10.2139/ssrn.3452662

Yonathan A. Arbel (Contact Author)

University of Alabama - School of Law ( email )

P.O. Box 870382
Tuscaloosa, AL 35487
United States

Murat C. Mungan

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
48
Abstract Views
575
PlumX Metrics