The Credibility Effect: Defamation Law and Audiences

What should be the legal response to false statements? 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 effect of such decisions on third parties: a credibility effect. Using a series of lab experiments, I find that defamation law makes individuals more trusting of reports from various media. This credibility effect is desirable when the report is true but can lead to unintended consequences in the case of misinformation. In particular, the credibility effect is shown to cast a stigma on innocent targets who choose not to file lawsuits. The existence of the credibility effect calls for different balances than are currently employed in defamation law; challenges the vindication justification; and, more broadly, illustrates the limits of policies intended to fight misinformation.