In the new age of Alternate Facts, one might argue that many actors personally benefit hugely from lying, at the expense of other sectors of society. Economically speaking you might argue that this is a form of moral hazard -- the actors bear relatively small risks to themselves, receive benefits and may impose great costs or risks to others.

Some examples:

  • A politician may willfully lie to the public about intelligence facts concerning a country's weapons of mass destruction and receive increased political capital at the expense of her country's cost of entering into an unnecessary war.
  • A populist news agency may willfully may lie about immigration or terrorism facts and receive increased circulation and advertising revenue at the expense of increased civil unrest, or in extreme cases contribute in driving a country into war justified by falsehoods.

Small risks to themselves, but great outsourced costs.

I think we can agree that, in general, lies are a generally 'a bad thing' that it would be wise to disincentivize them in many arenas (politics, science and academia, law, news media).

At the same time free speech seems like 'a good thing' that it would be unwise to curtail or disincentivize. What, if any, incentives could be introduced to reduce lying without seriously curtailing free speech?


Legal systems (which are ideally a forum of free discourse in pursuit of the truth) disincentivize lies by imposing jail-time costs to people who make false statement.

Science (which depends heavily on free discourse) disincentivizes lying firstly by peer-review processes (which ideally would cause a liar to waste their time when submitting falsehoods for publication), and where this fails, by retracting published falsehoods, public shaming and loss of employment.

Yet in politics and media specifically, we rarely see costs incurred for distributing objective falsehoods. Can incentives be introduced in these arenas without seriously limiting the beneficial aspects of free speech to society?

For the purposes of this discussion, its probably good to focus of lying as "willfully making statements that the actor objectively (and provably) knows to be false", and leave the discussion on statements of opinion for another day.

  • 2
    $\begingroup$ The short answer is it depends on the nature of restrictions, but most restrictions on free speech create principle-agent problems where whoever is supposed to enforce non-lying through uniform application of speech restrictions now has an incentive to apply it improperly for profit. $\endgroup$
    – Kitsune Cavalry
    Feb 3 '17 at 19:45
  • $\begingroup$ I think BKay's answer shows this question may be a better fit for Law or Politics. $\endgroup$
    – Giskard
    Feb 6 '17 at 5:39
  • $\begingroup$ I don't think legal restrictions on speech are likely to work. There are other kinds of incentives. Economists are experts there. $\endgroup$
    – user48956
    Feb 6 '17 at 19:54
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    $\begingroup$ Lying (as communicating falsehood) is surprisingly difficult to model as an equilibrium because it defies the requirement of mutual best responses. We have models that can accommodate vagueness; that is, one can choose not to tell the truth. But I haven't seen any model in which falsehood exists in equilibrium. When you talk about incentives in reducing lying, you have to first posit a model of lying, wherein we can study the impact of lying properly and ways to improve its welfare properties. $\endgroup$
    – Herr K.
    Feb 7 '17 at 6:21

If free speech is narrowly defined to only include true claims, true and false claims can be perfectly distinguished, the harm of false claims perfectly measured, and all claims are either true or false, then false claims are really no different than other forms of pollution. A standard pigovian tax should internalize the externalities and encourage the socially optimal level of truth telling. The social planner just has to tax each lie enough to discourage the social harm it does.

However, I maintain that in practice all of these assumptions are false. All experience seems to show that using the legal system to purge public discourse of lies leads to concentrating enormous power in those who make the lie / truth determination and that they will use that power in a way that is often inconsistent with objective truth And, when there is no objective truth there will still be those who would use the legal system to control public discourse in the name of protecting it.

In addition, the real world's imperfect legal processes are expensive and painful to participate in. That means that many true things that may be confused with lies will not be said, and that will further restrict freedom of speech.

  • $\begingroup$ I don't think there's any reason to think that disincentives are necessarily legal. Public humiliation/shaming are also possible. As is losing your employment (I would certainly be fired for willfully lying in job). $\endgroup$
    – user48956
    Feb 8 '17 at 3:54
  • $\begingroup$ That doesn't change the basic answer. Pigovian taxes don't have to be pecuniary. $\endgroup$
    – BKay
    Feb 8 '17 at 10:25

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