The Credibility Effect of Defamation Law

Abstract

What should be the legal response to false allegations? In the context of defamation law, courts try to set a standard that balances the interests of speakers and their potential targets. This article empirically demonstrates an unappreciated potential effect of such decisions on third parties: a credibility effect. Using a series of lab experiments (total N=400), it finds that defamation law makes individuals more trusting of reports on different media. This credibility effect is desirable when the report is true, but can lead to unintended consequences in the case of misinformation. The credibility effect also casts an unexpected stigma on innocent targets who choose not to file a lawsuit. The existence of the credibility effect calls for different balances than are currently employed in defamation law and, more broadly, illustrates the limits of policies intended to fight misinformation.