Cost-Benefit Analysis of Evidence Law and Factfinding

Utility considerations have been central to legal factfinding, at least since the days of Jeremy Bentham, the founding father of utilitarianism and a prominent evidence law theorist. A direct line can be drawn from Bentham’s “principle of utility” to cost-benefit analysis (CBA) so it would seem only natural that the realms of evidence law and judicial factfinding would harbor this type of reasoning. However, when legal scholarship began to incorporate economic reasoning and to address issues from a CBA perspective, evidence law and the practice of judicial factfinding remained very much out of the picture. The object of this chapter is to highlight the prospects for integrating CBA into contemporary evidentiary policy and institutions, and to draw the general contours of the evolving scholarship in these fields of research. It describes and analyzes two economically driven models of evidence and proof: the cost-minimization model, geared toward minimization of the cost of errors and the cost of accuracy as a total sum, and the primary behavior model aiming to incentivize socially optimal behavior and interactions. This analysis identifies the models’ difficulties, engendered, for the most part, by the misalignment between the private and the social costs and benefits of adjudication, and addresses the models’ relationship to the existing evidentiary rules and institutions.