The Value of Truth and the Optimal Standard of Proof in Legal Disputes

Posted: 3 May 2000

See all articles by Michael L. Davis

Michael L. Davis

Southern Methodist University (SMU) - Economics Department


This paper models the fact-finding process as one in which the defendant is accused of violating some legal standard (e.g. exceeding the speed limit). The fact-finder cannot observe the actual behavior but observes some variable that is a noisy signal of the truth (e.g. the reading from a radar detector). From this signal it is possible to calculate the probability of guilt. The standard of proof (the minimal probability necessary to convict) that minimizes the expected cost of error is seen as a tradeoff between the expected cost of false acquittal and convictions. A simple example shows a clearer signal of truth (a more reliable radar detector) may not always lower error costs. This is because the utility of a fact-finding method depends on the population of defendants and the standard of proof. These results clarify the source of disagreement over different fact-finding procedures.

JEL Classification: K40, K41

Suggested Citation

Davis, Michael L., The Value of Truth and the Optimal Standard of Proof in Legal Disputes. Journal of Law, Economics & Organization, Vol. 10, No. 2, 1994. Available at SSRN:

Michael L. Davis (Contact Author)

Southern Methodist University (SMU) - Economics Department ( email )

United States
214-768-3394 (Phone)
214-768-1821 (Fax)

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