The Optimal Amount of Falsified Testimony

Emons, Winand; Fluet, Claude (June 2005). The Optimal Amount of Falsified Testimony (Discussion Papers 05-06). Bern: Department of Economics

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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 favor 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 ability to commit to an adjudication scheme makes it more likely that the arbiter requires evidence.

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