DP6150 Accuracy versus Falsification Costs: The Optimal Amount of Evidence under Different Procedures

Author(s): Winand Emons, Claude Fluet
Publication Date: February 2007
Keyword(s): adversarial, costly state falsification, evidence production, inquisitorial, multi-sender game
JEL(s): D82, K41, K42
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6150

An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favour at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of them distorts the evidence less than when they testify alone. When the fixed cost of testifying is low, the arbiter hears both, for intermediate values one, and for high values no party at all. The arbiter's ability to remain uninformed as well as sequential testifying makes it more likely that the arbiter requires evidence.