Libel Bullies, Defamation Victims, and Litigation Incentives

Abstract

In the context of defamation law, we analyze a public figure’s incentives to bring negativevalue defamation suits in order to appear litigious, and how this affects her incentives to do wrong in the first place and the media’s incentives to expose this wrongdoing. In equilibrium, the public figure’s litigation incentives depend both on her own direct costs and benefits of doing so, and on journalists’ costs and benefits from litigation and publication. Furthermore, equilibrium wrongdoing and publication choices depend on an otherwise non-litigious public figure’s litigation payoffs. Potential effects of legal reform are briefly discussed.