The Economics of Political Dishonesty and Defamation

This paper addresses primarily the implications of the tort of defamation for the existence of political dishonesty in a society where the media have a wide impact and can influence electoral behavior. We present a model in which the tabloids have better information than society. Newspapers can monitor corruption and are, in a sense, auditors of politicians. The use of tabloids as auditors is limited to their self-interest in revealing corruption. The argument of the paper is that as long as newspapers are deterred from defamation, their auditing role is effective in deterring political corruption. © 1999 by Elsevier Science Inc.