# Truth Bounties: A Market Solution to Fake News

Canonical page: https://works.battleoftheforms.com/papers/ssrn-4204862/

[p. 1]
University of Virginia School of Law
Public Law and Legal Theory Research Paper Series 2022-61
Law and Economics Research Paper Series 2022-19
September 2022
Truth Bounties: A Market
Solution to Fake News
By
Yonathan A. Arbel
University of Alabama School of Law
Michael D. Gilbert
University of Virginia School of Law
University of Alabama School of Law
Working Paper No. 4204862
Abstract 4204862
A complete index of University of Virginia School of Law research papers is available at: Law and Economics:
http://www.ssrn.com/link/U-Virginia-LEC.html
Public Law and Legal Theory: http://www.ssrn.com/link/U-Virginia-PUB.html
EEEllleeeccctttrrrooonnniiiccc cccooopppyyy aaavvvaaaiiilllaaabbbllleee aaattt::: hhhttttttpppsss::://////ssssssrrrnnn...cccooommm///aaabbbssstttrrraaacccttt===444222000444888666222

[p. 2]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 1/53
TRUTH BOUNTIES: A MARKET SOLUTION TO
FAKE NEWS
Yonathan A. Arbel* & Michael D. Gilbert**
102 North Carolina Law Review (Forthcoming)
ABSTRACT
False information poses a threat to individuals, groups, and society. Many
people struggle to judge the veracity of the information around them, whether
that information travels through newspapers, talk radio, TV, or Twitter.
Concerned with the spread of misinformation and harmful falsehoods, much of
the policy, popular, and scholarly conversation today revolves around proposals
to expand the regulation of individuals, platforms, and the media. While more
regulation may seem inevitable, it faces constitutional and political hurdles.
Furthermore, regulation can have undesirable side effects and be ripe for abuse
by powerful actors, public and private.
This Article presents an alternative for fighting misinformation that avoids
many pitfalls of regulation: truth bounties. We develop a contractual mechanism
that would enable individuals, media, and others to pledge money to support the
credibility of their communications. Any person could claim the bounty by
presenting evidence of the falsity of the communication before a dedicated body
of private arbitrators. Under the system we envision, anyone consuming
information on the internet would know immediately if a given communication
had a bounty attached, whether the communication had been challenged, and
whether the challenge succeeded or failed. As John Stuart Mill recognized, we
can trust our grasp of the truth only by putting it to the fire of challenge. Truth
bounties open the challenge to all.
* Associate Professor of Law, University of Alabama.
** Vice Dean and Professor of Law, University of Virginia. For helpful comments, we thank Liam
Bourque, Danielle Citron, Shahar Dillbary, Benjamin McMichael, and participants in the Harvard
Law School Law & Economics Seminar, the American Law & Economics Conference at Columbia
University, the Midwest Law and Economics Conference at the University of Chicago, the
Maryland Carey Law Virtual Constitutional Law and Economics Workshop, and a seminar at
Université Paris Panthéon-Assas. Alex Wilson, Gilberto Gomez, and Boston Topping provided
diligent research assistance and offered many thoughtful suggestions.

[p. 3]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 2/53
Introduction .................................................................................. 3
I. Misinformation and Proposals for Reform ............................ 9
A. Increasing the Supply of True Information .......................... 10
B. Decreasing the Supply of False Information ............................ 12
C. Distinguishing True and False Information .............................. 16
II. Fake News in the Marketplace of Ideas ........................... 17
A. The Spillover Problem .......................................................... 18
B. Information Asymmetry ........................................................... 22
III. Truth Bounties .................................................................. 30
A. Skin in the Game .................................................................. 30
B. The Voluntary Pledge ............................................................... 32
C. Challenges and Fees ................................................................. 34
D. Arbitration ............................................................................ 35
E. Rewards and Signals ................................................................. 38
F. Equilibrium and Use Cases ....................................................... 40
G. Sustaining Truth Bounties .................................................... 46
IV. Bounties and the Freedom of Speech............................... 47
A. Contracts vs. Torts ................................................................ 47
B. Equity and Access ..................................................................... 49
C. Hands-On, Hands-Off, and the Invisible Hand ......................... 51
Conclusion ................................................................................... 53

[p. 4]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 3/53
INTRODUCTION
False information threatens society.1 Many people struggle to judge the
veracity of the information around them, whether that information travels
through newspapers, talk radio, or Twitter. Recent allegations about bad
vaccines, stolen elections, and sex crimes by politicians demonstrate the
problem.2 With social media’s speed and the amplification of content optimized
for likes, clicks, and shares rather than value, and sometimes at the behest of
foreign powers, the mixture of truth and lies churns.3 Some fake stories take
hold, driving opinions, trends, and possibly elections. Alarmed, leading scholars
have turned to this issue with a sense of urgency, offering a menu of regulatory
reforms in books,4 law reviews,5 conferences,6 and the popular press.7
The sense of urgency notwithstanding, and although “fake news” consumes
popular discussion, the basic issue is not new.8 Beyond mass media and the
press, in fields as varied as business, law, medicine, and politics, lying can be
beneficial, so people have an incentive to lie. When lying can be legally or socially
punished—fines, imprisonment, a loss of office or reputation—it can be
deterred, at least in part.9 This explains why products like toasters and providers
like doctors mostly perform as advertised. If they did otherwise, people could
1 See, e.g., Robert Chesney & Danielle Keats Citron, Deep Fakes: A Looming Challenge for Privacy,
Democracy, and National Security, 107 CAL. L. REV. 1753 (2019).
2 See, e.g., Anthony J. Gaughan, Illiberal Democracy: The Toxic Mix of Fake News,
Hyperpolarization, and Partisan Election Administration, 12 DUKE J. CONST. L. & PUB. POL'Y 57,
74 (2017) (“The ease with which fake news, misinformation, and false allegations spread like
wildfire is now a disturbing hallmark of modern politics.”).
3 Brendan Nyhan argues that concerns with fake news reflect a “moral panic,” with little systematic
evidence “to demonstrate that the prevalence of misperceptions today (while worrisome) is worse
than in the past.” Brendan Nyhan, Facts and Myths about Misperceptions, 34 J. ECON. PERSP. 232-33
(2020). Similarly, Yochai Benkler and others contend that misinformation is a real concern but is
elite-driven, rather than grassroots social media phenomenon. Yochai Benkler et al., Mail-In Voter
Fraud: Anatomy of a Disinformation Campaign, 6 BERKMAN CTR. RSCH. PUB. 1 (2020).
4 MARTHA MINOW, SAVING THE NEWS (2021); RICHARD L. HASEN, CHEAP SPEECH: HOW
DISINFORMATION POISONS OUR POLITICS―AND HOW TO CURE IT (2022).
5 Cass R. Sunstein, Falsehoods and The First Amendment, 33 HARV. J. L. & TECH. 388 (2020); Allison
Orr Larsen, Constitutional Law in an Age of Alternative Facts, 93 N.Y.U. L. REV. 175 (2018); Abby K.
Wood & Ann M. Ravel, Fool Me Once: Regulating Fake News and Other Online Advertising, 91
S. CAL. L. REV. 1223 (2018); Ari Ezra Waldman, The Marketplace of Fake News, 20 U. PA. J.
CONST. L. 845 (2018); Nabiha Syed, Real Talk about Fake News: Towards a Better Theory for Platform
Governance, 127 YALE L.J. F. 337 (2017-2018); Madeline Lamo & Ryan Calo, Regulating Bot Speech,
66 UCLA L. REV. 988 (2019); Erwin Chemerinsky, False Speech and the First Amendment,
71 OKLA. L. REV. 1 (2018).
6 See, e.g., International Conference on Media Manipulation, Fake News and Disinformation, World Academy
of Science, Engineering, and Technology, https://waset.org/media-manipulation-fake-news-anddisinformation-conference (last visited June 19, 2022); Fighting Fake News Workshop, Yale Law
School Information Society Project, https://law.yale.edu/isp/initiatives/floyd-abrams-institutefreedom-expression/practitioner-scholar-conferences-first-amendment-topics/fighting-fakenews-workshop (last visited June 19, 2022).
7 Ellen Maloney, Professor Examines How Social Media Incites Spread of Fake News, THE DAILY FREE
PRESS (Oct. 5, 2020); Kevin Aslett, It’s Not Easy for Ordinary Citizens to Identify Fake News, THE
WASHINGTON POST, (Apr. 7, 2020).
8 See, e.g., Marshall W. Van Alstyne, Free Speech, Platforms, and the Fake News Problem,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3997980. (recounting how frescos from
the 13th century BC record falsely the victory of Ramses over the Hittites).
9 Part of the problem is that not all lies are detectable, a systemic issue in the market for “credence
goods”—goods whose utility is not apparent even after consumption, such as vitamins, prayer,
legal advice, etc. See J. Shahar Dillbary, Trademarks as a Media for False Advertising, 31 CARDOZO. L.
REV. 327, 341 (2009).

[p. 5]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 4/53
sue for the harms they suffer, the state could regulate, reputations would suffer,
and profits would shrink. In many domains, economic, legal, and social
sanctions mitigate the problem of dishonesty, even if they do not quite solve it.
In the United States, critics argue that existing sanctions fall short for
deterring falsehoods, especially those propagated online. Unlike manufacturers
and doctors, the purveyors of online falsehoods are often difficult to find, live
outside the jurisdiction, and are judgment-proof.10 Challengers often lack
standing—and even a cause of action—when trying to sue over false stories
causing generalized harm.11 Suing costs time and money, damages are
speculative, and collection is uncertain. The First Amendment shields many
speakers, liars included, from lawsuits and regulations, allowing actions only for
certain categories of falsehoods that cause cognizable harms.12
Recognizing the shortfall, a new wave of literature calls for far-reaching
reforms. Leading scholars and politicians have considered a dizzying, and
sometimes contradictory, array of regulatory fixes. Information labels, fact
checks, expert curation, censorship, signal boosts and shadow bans,13 platform
liability, platform immunity, platform transparency, media subsidies, antitrust
tools—the list of reforms goes on. Some of these proposals have caught on with
legislators. Recently, Texas passed a law meant to fix perceived anti-conservative
bias by limiting social media platforms’ ability to curate content.14 In stark
contrast, President Biden expressed frustration with the failure of platforms to
curate content amid the Covid-19 pandemic—“They’re killing people.”15 The
Biden campaign called for the repeal of Section 230 of the Communications
Decency Act of 1996 (“CDA”), the federal law that provides a legal shield to
interactive computer services for most user-generated content. Recently a group
of Democrats proposed legislation in this vein.16
We make three contributions to the debate. First, we generate a clear,
comprehensive, and concise taxonomy of the various proposals. In our
framework, solutions to misinformation can be understood as attempts to
accomplish one or more of the following three goals: increase the supply of true
information, decrease the supply of false information, or improve people’s ability
to know the difference. Much of the problem of misinformation, we argue, can
be thought of as a ratio: either too many falsehoods or too few truths. This
organizational simplicity in an area full of scattershot proposals is important, not
least because it exposes contradictions and tensions within reforms and the
10 On the harms from defamatory remarks, see generally DANIELLE CITRON, HATE CRIMES IN
CYBERSPACE (2014). On the challenges of dealing with anonymous speech, see Lyrissa Barnett
Lidsky, Silencing John Doe: Defamation and Discourse in Cyberspace, 49 DUKE L.J. 855 (2000).
11 See infra note 185 and accompanying text.
12 See, e.g., United States v. Alvarez, 567 U.S. 709 (2012) (“When content-based speech regulation
is in question, however, exacting scrutiny is required.”).
13 See, e.g., Alstyne, supra note 8, at 23 (proposing that platforms that limit the exposure of accounts
produce misinformation.)
14 John Villasenor, Texas’ New Social Media Law is Blocked For Now, But That’s Not the End of the Story,
BROOKINGS (Dec. 14, 2021).
15 Quinta Jurecic, The Politics of Section 230 Reform: Learning from FOSTA’s Mistakes, BROOKINGS
(Mar. 1, 2022).
16 Margaret Harding McGill, E&C leader talks tech reform with Facebook, Google, Twitter, AXIOS (May
24, 2021)

[p. 6]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 5/53
motivations to pass them. These tensions suggest that something might be
missing from our understanding of the problem itself.
Our second contribution is to use the tools of economics to complement
and generalize the insights of scholars working in this area, who are mostly
experts in constitutional and administrative law.17 We share their diagnosis that
the marketplace of ideas is producing undesirable outcomes.18 We distill their
concerns into two distinct sources of market failure: spillovers and information
asymmetries 19 These two distinct failures call for different solutions.
Spillovers arise when one person’s speech affects others. Because of
spillovers, we have too much low-quality information and not enough highquality information in circulation. This helps explain why many reforms focus
on the “supply side,” that is, on the producers of information. Reforms aim,
directly or indirectly, to reduce the production of false speech or promote the
production of true speech. However, spillovers are not the whole story. The
marketplace of ideas also suffers from a distinct failure of information
asymmetries. Such asymmetries arise when speakers know more about the
veracity of the information than they share than do their listeners. Audiences are
left to wonder what information to trust and what to discard. This calls for
“demand side” solutions, meaning solutions focused on information consumers,
with fact-checking on social media being a prominent example.
Scholars before us have referenced these market failures, but some of their
finer implications have gotten lost. We leverage the economic framework to
offer a critical evaluation of some dominant proposals. As we show, some
proposals run the risk of being ineffective or even counterproductive,
exacerbating the problems they seek to solve. We believe that this evaluation
contributes an important element to contemporary debates and provides new
tools for improved solutions.
Our final contribution is to develop a solution to misinformation. The
solution is general; it could apply to accidental errors in publications, deliberate
lies, defamatory statements about individuals, and generalized lies that are not
legally cognizable. It works on both market failures. On the supply side, it
reduces the incentive to produce low-quality information by making it more
expensive (and conversely, increases the rewards to producing high-quality
17 See, e.g., Frederick Schauer, Free Speech, the Search for Truth, and the Problem of Collective Knowledge, 70
SMU L. REV. 231 (2017); David Pozen, “Truth Drives Out Lies” and Other Misinformation, KNIGHT
FIRST AMEND. INST. AT COLUM. UNIV. (Feb. 9, 2022); MINOW, supra note 4; HASEN, supra note 4;
Genevieve Lakier, The Invention of Low-Value Speech, 128 HARV. L. REV. 2166 (2015); Evelyn Douek,
Content Moderation as Administration, 136 HARV. L. REV. (2022).
18 As Blocher notes, the marketplace analogy remains “the reigning (if somewhat embattled)
justification for free speech.” Joseph Blocher, Institutions in the Marketplace of Ideas, 57 DUKE L.J.
821, 847 (2008).
19 While we borrow ideas from economic theory, we do not make any strong assumptions of
rationality or perfect competition. See, e.g., id, at 833 (noting the limits of the marketplace of ideas
given, among others, “participants’ imperfect ability to reason”). To the contrary, we are sensitive
to the many cognitive and epistemic problems that prevent individuals from engaging in optimal
decision-making. At the same time, we take seriously Professor Lidsky’s admonition that to live in
a democracy requires some degree of respect and trust in the faculties of ordinary people. See
generally Lyrissa B. Lidsky, Nobody's Fools: The Rational Audience as First Amendment Ideal, 2010 U. ILL.
L. REV. 799 (2010). We emphasize the role of a public that earnestly tries to learn about the world
but is often stymied. See infra note 187 and accompanying text.

[p. 7]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 6/53
information). On the demand side, the solution aims to overcome information
asymmetries by helping people distinguish truths from lies. Unlike factchecking, our proposal labels communications before they circulate, punishes
liars, rewards truth-tellers, and reaches more forms of communication. It does
not require constitutional amendments, regulations, or other government
involvement. It just requires a clear and complete understanding of why the
marketplace of ideas has failed.
The key insight is straightforward: to fight misinformation, speakers must
have skin in the game. They must lose something—they must be punished—
when they lie. Law often attempts to punish communicators of false
information, but it does so bluntly and often ineffectively. Suing and prosecuting
individuals is often unsuccessful due to jurisdictional challenges, legal standards,
and defendants with few assets to recover; the deep pockets—social media
companies and other online hubs—enjoy broad immunity from liability thanks
to Section 230. The trick to our mechanism is to have communicators punish
themselves, and do so voluntarily and frequently. This may sound counterintuitive,
but as we emphasize throughout, most speakers do not simply want to produce
information—they want listeners to believe it. For listeners to believe
information, speakers must be credible. One way to gain credibility is to punish
oneself for lying.
We dub our mechanism “truth bounties.” In brief, a communicator—we
will focus on an editorial board or a freelance writer, but it could be anyone—
would publish a story, advertisement, press release, etc., and simultaneously
pledge money (say, $10,000) to a third party. The story would bear an icon
indicating the bounty and its amount. Anyone who believes the story to be false
could file a challenge. To discourage frivolity, trolling, and strategic action, the
challenger would have to pay a fee to the third party, akin to a filing fee in court.
Private arbitrators would resolve the dispute, avoiding entanglements with the
government and the First Amendment. If the challenger won, she would get the
journalist’s bounty, and the loss of the bounty would be publicized. If the
challenger lost, the bounty would remain for others to claim.
Truth bounties are to speech what product warranties are to refrigerators.20
Truth bounties let communicators put skin in the game. We expect speakers to
post bounties for roughly the same reasons that manufacturers offer
warranties.21 Truthful communicators will welcome bounties because they send
a clear positive signal: they stand by their work. Truth bounties are a surefire
way to gain credibility and its attendant benefits: readers, buyers, voters. Because
serious people will not lose their bounties—their news is not fake—the system
poses little risk for them. Hoaxers, on the other hand, will shun the risk.
Someone will successfully challenge their fake news and win the money.
Foreseeing this, hoaxers will not post a bounty.
20 Sanford Grossman, The Informational Role of Warranties and Private Disclosure About Product Quality,
24 J.L. & ECON. 461 (1981); George A. Akerlof, The Market for “Lemons”: Quality Uncertainty and the
Market Mechanism, 84 Q.J. ECON. 488, 499–500 (1970).
21 Research shows that warranties result in higher purchase intentions and higher perceived quality,
consistent with theory. See, e.g., Jens Hogreve & Dwayne D. Gremler, Twenty Years of Service
Guarantee Research: A Synthesis, 11 J. SERV. RES. 322 (2008).

[p. 8]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 7/53
The public would be a principal beneficiary of this system. The truth bounty
icon could appear next to communications the moment they circulate; no need
to wait days or weeks for a fact check. The icon would tell consumers which
stories have bounties and are therefore credible. Rather than resorting to crude
heuristics, such as only watching a single TV channel one trusts, consumers
could indulge in a richer information diet. With truth bounties, truth and lies can
separate rather than mix. Truth bounties would be open to all—anyone could
attach a bounty to their speech, and anyone could challenge it. Thus, the system
would sidestep the challenges of borders, standing, and jurisdiction, while
democratizing the search for truth.
Truth bounties offer a promising and robust solution to a vexing problem.22
Besides contextualizing truth bounties in light of competing reform proposals,
our objective here is to lay the groundwork for an actual, workable system.
One might worry that truth bounties favor the rich and harm the poor. This
is an important concern, but we do not think it is well founded. The system
would aid consumers of information by helping them sort what is true from what
is false free of charge. Insofar as poorer people have less education and fewer
alternative mechanisms for filtering misinformation, truth bounties would be
especially beneficial. With respect to the production of information by journalists
and others, truth bounties would not necessarily be expensive. Honest producers
of information would not lose their bounties; they would get the money back
after a certain time. By signaling credibility, bounties would allow small players
to compete in the marketplace of ideas with established, monied interests such
as major broadcasting networks and newspapers. One might worry that rich
actors could take advantage of the system by placing a bounty on stories that are
false. In the best-case scenario the bounty would help the false story catch on.
In the worst-case scenario, someone would challenge the story and collect the
bounty, but the rich actor would not mind because she has plenty of money to
spare. This could happen, but we do not think it would be likely or common.
Even if a wealthy actor were willing to bear the loss of bounties, the system
would record and publicize her track record—every story that she bountied,
every challenge that she lost, and so on. Everyone would see that her stories
lack credibility. We will return to these issues below.23
The last and perhaps most radical contribution of our paper is optimism.
Reading the literature on fake news and misinformation, one cannot avoid an
overwhelming feeling of pessimism. Many scholars who are learned in the liberal
tradition, committed to the values of a free society, and acutely aware of the
history of government overreach, censorship, and discriminatory distribution of
22 We are not the first to argue that contractual devices (including warranties) can promote honesty,
but we are the first to develop truth bounties in detail. See Yonathan Arbel, Slicing Defamation by
Contract, U. CHI. L. REV. ONLINE 109 (2020) (briefly discussing truth bounties in the context of
defamation law). In a short blog post we discovered after writing this Article, Robin Hanson
briefly discusses “News Accuracy Bonds.” See Robin Hanson, News Accuracy Bonds, OVERCOMING
BIAS (Sep. 9, 2018, 12:30 PM), https://www.overcomingbias.com/2018/09/news-accuracybonds.html. Two scholars explored a mechanism akin to truth bounties for expert witnesses.
Robert Cooter & Winand Emons, Truth-Bonding and Other Truth-Revealing Mechanisms for Courts, 17
EUR. J. LAW & ECON. 307 (2004). For insightful discussions of fake news, credibility, and
incentives, see generally Van Alstyne, supra note 8, at 27-31; Daniel Hemel & Ariel Porat, Free
Speech and Cheap Talk, 11 J. LEG. ANALYSIS 46 (2019).
23 See infra Part IV.B.

[p. 9]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 8/53
access to speech, have resigned themselves to the inevitability of speech
suppression. A prominent example is Dean Chemerinsky who confessed his
apostasy: “I still believe in the premise of the First Amendment—that more
speech is better”, and then added, “But ever more, I realize that it is a matter of
faith, and the internet may challenge that faith for all of us.” 24 This
pessimism may be premature. Thinking beyond the hands-off/hands-on
dichotomy of either laissez-faire policies or centralized regulation could help us
imagine new solutions. Truth bounties demonstrate the value of institutional
designs that break this binary mold. Truth bounties offer an intermediate
position and demonstrate that through the building of institutions and market
design we can realize important social goals.
24 Chemerinsky, supra note 5, at 15.

[p. 10]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 9/53
I. MISINFORMATION AND PROPOSALS FOR REFORM
Misinformation is an ancient problem. Plato worried about deception and
manipulation in politics over 2,000 years ago.25 Sellers exaggerate, puff, or
outright lie about the quality of their goods and services, and presumably they
have done so for centuries. However, misinformation seems especially salient
today. Publication and dissemination have never been easier. Perhaps as a
consequence, “fake news,” meaning false or misleading information presented
as accurate reporting, circulates widely on social media. New technology allows
for “deep fake” videos that depict real people saying and doing things they never
said or did. Changing markets have weakened traditional journalism and
investigative reporting, especially at the local level.26 The scope of private
statements, alongside their permanence on the internet, amplify the reach of
defamatory statements. Together these developments make it hard for people to
assess the veracity of information.
The stakes are high. False claims about election fraud led to an assault on
the U.S. Capitol.27 False claims about COVID have led people to reject valuable
vaccines and ingest alternative medicines of doubtful efficacy.28 Absurdly false
claims about politicians engaged in the sex trafficking of minors caused a
gunman to storm a restaurant.29 False claims about Dominion’s voting machines
have led to threats against the lives of the company’s management and weakened
trust in the democratic process. False claims about Nazis helped Russia (attempt
to) justify its invasion of Ukraine.30
Given the stakes, many scholars have proposed urgent reforms. This Part
canvasses some of those proposals. We cannot do justice to all of the promising
reforms on the table, but we can summarize some of the most common and
compelling arguments. Understanding them will clarify and distinguish our
approach, which we will develop later.
To organize the various proposals in a common framework, we focus on
the root problem: people are exposed to a mix of true and false information and
25 See generally PLATO, REPUBLIC. See also Donald Lateiner, “Bad News” in Herodotos and Thoukydides:
Misinformation, Disinformation, and Propaganda, 9 J. ANCIENT HIST. 53 (2021).
26 JAMES T. HAMILTON, DEMOCRACY’S DETECTIVES: THE ECONOMICS OF INVESTIGATIVE
JOURNALISM 12-33 (2017).
27Steve Inskeep, Timeline: What Trump Told Supporters For Months Before They Attacked, NPR (Feb. 8,
2021); Atlantic Council’s DFRLab, #StopTheSteal: Timeline of Social Media and Extremist Activities
Leading to 1/6 Insurrection, JUST SECURITY(Feb. 10, 2021).
28 Brian Stelter & Virginia Langmaid, Nearly 80% of Americans Have Been Exposed to Covid Misinfo,
and Many Don't Know What to Believe, Survey Says, CNN BUSINESS (Nov. 9, 2021); Bryan Sullivan,
Fox News Faces Lawsuit For Calling COVID-19 A ‘Hoax’, FORBES (Apr. 10, 2020).
29Jessica Gresko, ‘Pizzagate’ Gunman in DC Sentenced to 4 Years in Prison, AP (June 22, 2017).
30 Daniel Funke, Fact Check: Putin's Claims Justifying War In Ukraine Are Baseless, Experts Say, USA
TODAY (Mar. 30, 2022, 2:16 PM),
https://www.usatoday.com/story/news/factcheck/2022/03/30/fact-check-why-putins-claimsjustifying-war-ukraine-baseless/7089270001/; Rachel Treisman, Putin's Claim of Fighting Against
Ukraine 'Neo-Nazis' Distorts History, Scholars Say, NPR (Mar. 1, 2022)
https://www.npr.org/2022/03/01/1083677765/putin-denazify-ukraine-russia-history.

[p. 11]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 10/53
cannot distinguish between the two. One way to address the problem is to
improve the ratio of true to false information. As the ratio improves, the ability
to distinguish truth from falsity becomes less important.31 To see this clearly,
consider the limit case: if all information in circulation is true, people’s ability to
screen out false information becomes irrelevant. An alternative approach is to
help people distinguish between true and false information. Based on this, we
divide reform proposals into three categories: increasing the numerator of true
information, decreasing the denominator of false information, and assisting
people with making the distinction.
A. Increasing the Supply of True Information
In 2021, Professor Martha Minow, the former Dean of Harvard Law
School, published an important book titled Saving the News.32 The book received
considerable attention,33 understandably given its lofty ambitions. The core
argument is that “the press” has suffered in recent decades and fallen from its
“golden age,” which Minow identifies as the era between 1960 and 1980.34
Because of digital news and algorithms that tailor content to individuals, many
people live in echo chambers, giving them “few opportunities to learn,
understand, or believe what others are hearing as news.”35 These developments
have led to a democratic deficit, as “trust in news” is “essential in a democratic
society.”36
Minow offers many proposals to help traditional news. One proposal is to
create a royalty system for news shared online. The goal of this proposal is to
compensate news creators, whether The New York Times or the non-profit
Reveal, for their efforts when their reports are shared and published on social
media. 37 Minow’s approach would involve the robust enforcement of
“intellectual property rights for news” as this “means providing compensation
to producers that would help sustain the reporting and writing of material that
otherwise is at risk as conventional journalism falters.”38 The hope is that these
augmented resources would encourage the production of high-quality reporting.
31 We should distinguish between, on the one hand, sorting truths from falsehoods and, on the
other hand, the costs from failing to do so accurately. It might be better to believe a hundred
small lies than to fall for a single big one. See Yonathan A. Arbel & Murat Mungan, Defamation
Law and Bayesian Audiences, J. LEG. STUD. (Forthcoming, 2022).
32 MINOW, supra note 4.
33 See, e.g., Kevin M. Lerner, The News is Dead, Long Live the News!, BOS. REV. (Aug. 10, 2021),
https://bostonreview.net/articles/the-news-is-dead-long-live-the-news/; Alex Dalton, The Former
Harvard Law Dean Who Wants Government to Save the News Business, WASH. MONTHLY (July 26, 2021),
https://washingtonmonthly.com/2021/07/26/the-former-harvard-law-dean-who-wantsgovernment-to-save-the-news-business/; Alabama Law Hosts Top Constitutional Law Professors for
First Amendment Roundtable Discussion, ALA. L. SCH. (Oct. 20, 2021),
https://www.law.ua.edu/blog/news/alabama-law-hosts-top-constitutional-law-professors-forfirst-amendment-roundtable-discussion/.
34 MINOW, supra note 3, at 4.
35 Id.
36 Id. at 7.
37 Id. at 104-106.
38 Id. at 107

[p. 12]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 11/53
This proposal aims to increase the supply of accurate information in
circulation. As the supply increases, the probability of a particular
communication being true should increase, and fewer people should be duped
by misinformation, regardless of whether they are adept at distinguishing reliable
from unreliable sources.
Whether Minow’s proposal would succeed is uncertain. If platforms have
to pay license fees for the sharing of quality content, they might prioritize the
sharing of unlicensed content. While it costs to produce quality journalism,
QAnon and other providers of misinformation gladly license their merchandise
for free.39 Moreover, if sharing news costs platforms, they might prioritize
sharing only those stories likely to generate clicks and ad revenue—revenue that
they could use to pay the news creators. This could create a dismal equilibrium
that incentivizes the production of sensationalist stories, click-bait headlines, and
culture-war materials. Thus, proposals that rely on IP enforcement could
backfire by increasing the proportion of false or low-quality stories shared on
social media. Paywalled journalism might provide an analogue. By generating
revenue, paywalls fund the production of quality journalism, but they dampen
its distribution.40 Minow is aware of this risk. She offers to solve it by retiring IP
rights after two years.41 Most of the value of news, however, comes from their
immediate consumption. Expansive IP alone could distort incentives, dampen
the spread of news, and encourage problematic journalistic practices.
Whatever the merits of Minow’s specific proposal, the basic intuition
behind it seems sound: to encourage the production of high-quality journalism,
we must direct more resources to it. Others have offered similar proposals.
Professors Sunstein and Hasen, for example, have each suggested subsidizing
journalism.42 Professor Leiter supports a revival of the “fairness doctrine,”
which would require information providers like broadcast media to give major
political parties equal time when addressing public issues.43 Among other
39 See Berisha v. Lawson, 141 S. Ct. 2424, 2427 (2021) (Gorsuch, J., dissenting) (“the distribution
of disinformation—which costs almost nothing to generate—has become a profitable business
while the economic model that supported reporters, fact-checking, and editorial oversight has
deeply eroded”).
40See, e.g., Mark Hill, Paywalls, Newsletters, and the New Echo Chamber, WIRED (Dec. 7, 2020),
https://www.wired.com/story/paywalls-newsletters-and-the-new-echo-chamber/ (Quoting
journalism professor Damian Radcliffe “people who are priced out of news . . . will be pushed
towards free news, some of which is more dubious in nature”).
41 MINOW, supra note 4, at 107 (“To mitigate [concerns with paywalls], the right to compensation
could expire two years from the date of first publication.”).
42 HASEN, supra note 4, at 28, 153-54; Richard L. Hasen, How to Keep the Tide of Fake News from
Drowning Our Democracy, N.Y. TIMES (Mar. 7, 2022),
https://www.nytimes.com/2022/03/07/opinion/cheap-speech-fake-news-democracy.html;
CASS R. SUNSTEIN, DEMOCRACY AND THE PROBLEM OF FREE SPEECH, 19-21, at 68-75, 89-91
(1993) (discussing normative and policy arguments that would support a regulatory scheme that
subsidizes dissemination of legitimate news and information).
43 Brian Leiter, The Epistemology of the Internet and the Regulation of Speech in America, GEO. J.L. & PUB.
POL’Y, (forthcoming 2022) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3939948 (last
revised Jan. 10, 2022).

[p. 13]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 12/53
effects, the fairness doctrine could increase the supply of accurate information
by allowing for real-time challenges to spurious or unsupported claims.
B. Decreasing the Supply of False Information
Having described proposals to increase the supply of truthful information,
we next consider proposals to decrease the supply of false or misleading
information. Stricter defamation laws offer one method. Many scholars support
such a change. 44 Justices Thomas and Gorsuch would loosen federal
constitutional constraints and give states greater discretion to regulate
defamation.45 Presidents Biden and Trump voiced dissatisfaction with what they
believe is too little accountability for speech in social and traditional media.46
Pundits across the political spectrum have expressed similar arguments.47
Stricter defamation laws might be helpful. Expanding the range of
cognizable legal harms, reducing evidentiary burdens, allowing lawsuits by public
figures, and generally making it easier to recover damages from people who
spread lies should discourage lying. But this approach has important limits.
Defamation law only penalizes false information that harms the reputations of
specific people or entities. Defamation law does not reach false information in
general, as with the statement, “the war in Ukraine is fake.”48 Furthermore,
expansive defamation laws come with familiar problems, such as the general
suspicion of regulation and the risk from letting government officials influence
or even decide what is true or false. Beyond these familiar limitations, we offer
44 For a few examples, see Sunstein, supra note 5, at 389 (arguing that “New York Times Co. v.
Sullivan … looks increasingly anachronistic”); Cristina Tilley, (Re)categorizing Defamation, 94 TUL. L.
REV. 435 (2020); Glenn Reynolds, Rethinking Libel for the Twenty-First Century, 87 TENN. L. REV. 465,
465 (2020) (calling for reform); JUSTIN HENDERSON, THE TORTS PROCESS, 856 (9th ed. 2020)
(“Recent years have seen growing dissatisfaction with. . . . the law of defamation.”); David A.
Anderson, Is Libel Law Worth Reforming?, 140 U. PA. L. REV. 487, 550 (1991) (“The present law of
libel is a failure.”).
45 Berisha v. Lawson, 141 S. Ct. 2424 (2021) (Gorsuch, J., dissenting); McKee v. Cosby,139 S. Ct.
675, 682 (2019) (Thomas, J., concurring).
46 Rachel Lerman, Social Media Liability Law is Likely to Be Reviewed under Biden, WASH. POST (Jan. 18,
2021); Michael M. Grynbaum, Trump Renews Pledge to ‘Take a Strong Look’ at Libel Laws, N.Y. TIMES
(Jan. 10, 2018), https://perma.cc/M2XJ-JW8M; Donald J. Trump (@realDonaldTrump),
TWITTER (Sept. 5, 2018, 6:33 AM).
47 See, e.g., Bruce Fein, End the First Amendment Sanctuary for Fake News, THE AM. CONSERVATIVE
(Feb. 27, 2019, 1:00 PM), https://perma.cc/CUL8-LC34; Paul Schindler, Hoylman Said Stronger
Law Would Protect Lincoln Project’s Ivanka-Jared Billboards, GAY CITY NEWS (Oct. 29, 2020),
https://perma.cc/KUD9-L9QN.
48 Defamation law bars false statements about groups unless “the group or class is small such that
the matter can be reasonably understood to refer to [a specific] member”. RESTATEMENT
(SECOND) OF TORTS § 564A (AM. LAW INST. 1977). It is common to view the maximal group size
as consisting of 25 members. See O’Brien v. Williamson Daily News, 735 F. Supp. 218, 223 (E.D.
Ky. 1990), aff'd, 931 F.2d 893 (6th Cir. 1991). Modern interpretations of the First Amendment
seem to bar the possibility of creating liability for group libel, notwithstanding the Supreme Court’s
decision in Beauharnais v. People of State of Ill., 343 U.S. 250 (1952). See Brysk v. Herskovitz, 142
S. Ct. 1369, 212 L. Ed. 2d 326 (2022)(“While the decision [in Beauharnais] has never explicitly
been overruled, it appears that the case has been limited to its precise facts in subsequent decisions
of the Supreme Court.”).

[p. 14]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 13/53
later a more comprehensive critique. For now, it is enough to recognize that
defamation law can only do so much.49
Stricter defamation laws focus on the production of false information.
Different proposals aim to limit the dissemination of false information. For
consumers, the effect would be the same: a smaller proportion of the
information they encounter is false. The mechanism, however, is starkly
different.
Limiting dissemination shifts the focus from individual writers and news
media to content platforms—mainly, social media platforms.50 A modern turn
in the scholarship looks at platforms as sites of administration and governance
of free speech rights, whose decisions are influenced but not always determined,
by the First Amendment.51 Under some proposals, Facebook, for example,52
could “prioritize[e] authoritative news sources” through algorithms or similar
means, and “downrank[ ] . . . deceptive content.”53 This and other proposals use
the term “curation” or “content moderation,” but they do not always mean
platform self-governance of its content—i.e., standard content moderation.
While some call for more robust, but content-agnostic, internal self-control,54
others envision curation under government mandates, which can be fairly
characterized as the outsourcing of censorship (or, in Jack Balkin’s terminology,
“collateral censorship.”).55 An effective, and arguably successful, example of
private corporate power over online speakers came in the wake of January 6th
when Google, Facebook, and Twitter limited or removed QAnon content from
their platforms.56 One study found a steep decline in internet discussions around
QAnon following these actions.57 At the same time, this curation met some
political backlash, most recently in the form of a Texas law that sought to make
it illegal.58
49 See infra Part IV.A.
50 Professor Balkin calls this “New School speech regulation.” See Jack M. Balkin, Free Speech in the
Algorithmic Society: Big Data, Private Governance, and New School Speech Regulation, 51 UC DAVIS L. REV.
1149 (2018) .
51 Evelyn Douek, Content Moderation as Administration, 136 HARV. L. REV. 3 (2022); Kate Klonick,
The New Governors: The People, Rules, and Processes Governing Online Speech, 131 HARV. L. REV. 1598
(2020).
52 Mark Verstraete, Derek E. Bambauer & Jane R. Bambauer, Identifying and Countering Fake News,
73 HASTINGS L.J. 821 (2022).
53 Pozen, supra note 17.
54 See, e.g., Danielle Citron, Cyber Civil Rights, 89 B.U. L. REV. 61 (2009).
55 Balkin, supra note 50, at 1177 (“Collateral censorship in the digital era involves nation states
putting pressure on infrastructure providers to censor, silence, block, hinder, delay, or delink the
speech of people who use the digital infrastructure to speak.”). Beyond censorship, some people
suggest more radical reforms, such as engaging antitrust authorities to regulate platforms. See, e.g.,
MINOW, supra note 4; Amy Kapiczisk, Freedom from the Marketplace of Speech, KNIGHT FIRST
AMENDMENT INST. AT COLUM. UNIV. (Feb. 14, 2022), https://knightcolumbia.org/blog/freedomfrom-the-marketplace-of-speech; Hasen, supra note 4, at 130.
56 Jared Holt & Max Rizzuto, QAnon’s Hallmark Catchphrases Evaporating from the Mainstream Internet,
MEDIUM: DFRLAB (May 26, 2021), https://medium.com/dfrlab/qanons-hallmark-catchphrasesevaporating-from-the-mainstream-internet-ce90b6dc2c55.
57 Id.
58 CENSORSHIP OF OR CERTAIN OTHER INTERFERENCE WITH DIGITAL EXPRESSION, INCLUDING
EXPRESSION ON SOCIAL MEDIA PLATFORMS OR THROUGH ELECTRONIC MAIL MESSAGES, 2021 Tex.

[p. 15]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 14/53
To encourage curation, lawmakers could increase legal exposure for false
information published on platforms. To accomplish this, many scholars support
reforming Section 230 of the Communications Decency Act.59 In brief, Section
230 immunizes platforms from liability for speech disseminated through their
systems. Many commentators support eliminating Section 230 protections60 and
imposing tort liability on websites that publish “foreseeably harmful” content. 61
Danielle Citron is a leading voice in this area. In a number of articles she has
charted a course for the redrafting of Section 230. In her view, Section 230
performs a vital role, because it allows platforms to moderate content without
risking legal exposure, thus encouraging the creation of online communities with
distinct character. She, however, forcefully rejects the broad protections
afforded to platforms that host illegal content. In her view, platforms should be
liable for illegal content if they cannot show that they have taken “reasonable
steps to address unlawful uses … that clearly create serious harm to others.”62
Legal scholars Mark Verstraete, Jane Bambauer, and Derek Bambauer have
a different view. They call for expansion of Section 230 protections on the ground
that reducing “legal liability for internet platforms” will “encourage
intermediaries to filter fake news without risk of lawsuit or damages.”63 They
suggest a model for platforms that would be run by an “elite staff of editors and
journalists ... [who would] make difficult editorial judgments about
propaganda.”64 The model entity they propose for this delicate task is the BBC.65
These proposals face headwinds. Without adversarial or at least deep
investigative processes, platforms cannot necessarily determine the truth or
falsity of stories, especially when the stories have “a kernel of truth that enables
their creators to artfully mix fact and fiction in a way that upends traditional
Sess. Law Serv. 2nd Called Sess. Ch. 3 (H.B. 20) (VERNON’S); Andrew Zhang, Texas Law Prohibiting
Social Media Companies from Banning Users Over Their Viewpoints Reinstated by Appeals Court, THE TEXAS
TRIBUNE (May 11, 2022), https://www.texastribune.org/2022/05/11/texas-social-media-lawreinstated/.
59 Evelyn Douek, Governing Online Speech: From “Posts-As-Trumps” to Proportionality and Probability, 121
COLUM. L. REV. 759, 767 (2021), (“Section 230 of the Communications Decency Act —is
increasingly under siege across the political spectrum, with its reform seemingly imminent”).
60 MINOW, supra note 4, at 104-138; Brian Leiter, Cleaning Cyber-Cesspools: Google and Free Speech, in
THE OFFENSIVE INTERNET: SPEECH, PRIVACY, AND REPUTATION, 161-62 (Martha Nussbaum and
Saul Lemore eds., 2010).
61 Leiter, supra note 30, at 25.
62 See, e.g., Citron, supra note 54; Danielle Citron, How to Fix Section 230, B.U. L. REV. (forthcoming)
(last revised 17 Mar. 2022); Danielle Citron & Benjamin Wittes, The Internet Will Not Break: Denying
Bad Samaritans § 230 Immunity, FORDHAM L. REV. (2017); Danielle Keats Citron & Mary Anne
Franks, The Internet as Speech Machine and Other Myths Confounding Section 230 Reform, 2020 U. CHI.
LEGAL F. 45, 71 (2020).
63 Verstraete, Bambauer & Bambauer, supra note 52, at 23-25.
64 Id. at 27.
65 Id. at 27; see also Brett Frischmann, Understanding the Role of the BBC as a Provider of Public
Infrastructure, YESHIVA UNIV. JACOB BURNS INST. FOR ADVANCED LEGAL STUD. (Jan. 11, 2017),
available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2897777 (calling for the BBC
to create a social media network). Note that the BBC does not have an unblemished record. Mike
Thomson, A Very British Coup, BBC (Aug. 22, 2005),
https://www.bbc.co.uk/radio4/history/document/document_20050822.shtml (“the BBC was
used to spearhead Britain’s propaganda campaign.”).

[p. 16]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 15/53
modes of debunking information.”66 When making hard choices that involve
discretion, it will be all but impossible for platforms not to consider their own
commercial interests.67 Censorship and curation require a special degree of
certainty because there is usually no transparency or adversarial process. 68 No
one outside the editing rooms knows what got deleted. The proposal to use
disinterested elites for censorship or curation will not solve this problem.
Verstraete, Bambauer, and Bambauer demonstrate, perhaps inadvertently, the
challenge of having an elite group make censorship decisions. They use the lableak theory of Covid-19 as an illustration of “fake news.” They argue that despite
persistent debunking, the theory “retains its grip on a significant share of
Americans.”69 Since they published their work, however, this theory has been
“re-bunked,” meaning some experts have considered it anew, argued for its
plausibility, and urged political actors to take it seriously.70 If even careful
scholars who study fake news reach uncertain conclusions about issues as
important as a global pandemic, we should worry about the capacity of any actor
to censor information carefully, consistently, and accurately.
In addition to questions of competence, many other challenges to curation
and censorship loom. Pre-screening all information could be prohibitively
costly, but selectively screening after dissemination might be useless. By then
the information has already circulated. More generally, many people frown on
regulation and coercion. Censorship, collateral censorship, and even heavyhanded content moderation run contrary to democratic values and the so-called
marketplace of ideas. 71 Public actors can abuse censorship for personal
advantage, as when Vladimir Putin silences dissent.72
In sum, many proposals aim to decrease the supply of false or misleading
information. In theory, this strategy should expose people to more truth. In
practice, it faces challenges. This approach requires powerful actors, whether
the government, large platforms, or both, to screen information. Some solutions
are more moderate, but middle-of-the-road solutions can only screen the most
egregious forms of disinformation.
66 Verstraete, Bambauer, & Bambauer, supra note 52.
67 Jack Balkin notes how central curation is to the business model of online platforms. “Social
media companies . . . realized that a substantial aspect of their product was creating a hospitable
environment for end-users.” Balkin, supra note 50, at 1149.
68 Klonick, supra note 51, at 1635-1649.
69 Leiter, supra note 30 at 37.
70Amy Maxmen & Smriti Mallapaty, The COVID Lab-leak Hypothesis: What Scientists Do and Don’t
Know, NATURE (June 8, 2021); Alexander Smith, China Slams New WHO Report Suggesting Further
Investigation Into Covid ‘Lab Leak’ Theory, NBC NEWS (June 10, 2022, 12:38 PM),
https://www.nbcnews.com/news/world/covid-19-urges-investigation-chinese-wuhan-lab-leaktheory-rcna32910.
71 See Se. Promotions, Ltd. v. Conrad, 420 U.S. 546, 553(1975)(“Our distaste for censorship—
reflecting the natural distaste of a free people—is deep-written in our law.”).
72 Leiter, supra note 13, at 16 ( “The primary reason to be skeptical of regulation of speech is the
reliability of regulators, who often have bad motives for suppressing speech.”); see also
MILTON, AREOPAGITICA 745 (“[in the search for truth, we must not] set an oligarchy of twenty
engrossers over it, to bring a famine upon our minds again, when we shall know nothing but what
is measured to us by their bushel.”).

[p. 17]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 16/53
C. Distinguishing True and False Information
If people could sort truths from lies, we could worry less about producing
more of the former and less of the latter. If people were sufficiently savvy, even
a gush of misinformation and propaganda could not lead them far astray. This
idea is reflected in reform proposals that aim to make information consumers
better at making distinctions.
Much work in this spirit focuses on labeling. Social media platforms like
Twitter and Facebook already label some posts as “misleading” or “false.”73
Recently Twitter began flagging tweets that link to Russian state-sponsored
media. Private organizations like Ad Fontes Media and NewsGuard rate the
reliability of news sources.74
Scholars have pushed for more. Professor Hasen wants mandatory labels
on altered videos or audio, if and when the technology for detecting such
manipulation becomes available.75 Professor Wood and Commissioner Ravel
want mandatory disclosure of the sources of political speech on the internet.76
Others want labels on information akin to nutrition facts on packaged food.77
Labeling is often lauded for its light-touch approach. The labeler—
typically a platform or search engine—indicates that the information is
contested, inaccurate, or triggering, sometimes with a link to an authoritative (or
seemingly-authoritative) source, such as a government agency. Because no
information is deleted or redacted, labeling does not raise the same objections as
outright censorship. To clarify the point, consider the harm from type-1 and
type-2 errors. With censorship, some truths get silenced, and some falsehoods
slip through. Mistakes are inevitable. However, mistakes in labeling seem less
harmful than mistakes in censoring.
There is much to like about labels. However, they are not a panacea.
According to Professor Pozen, “warning labels, fact checks, corrections,
criticisms, and the like . . . have disappointed in countless discrete domains,” and
“[w]e shouldn’t expect them to solve a world-historical epistemic crisis.”78 Pozen
is probably right that labeling cannot “solve” the problem of misinformation,
but it can help. Some evidence shows that labels are effective,79 and new and
potentially useful innovations in labeling are in development.
73 Rachel Kraus, Facebook Labeled 180 Million Posts As 'False' Since March. Election Misinformation Spread
Anyway, MASHABLE (Nov. 19, 2020), https://mashable.com/article/facebook-labels-180-millionposts-false; Musadiq Bidar, Twitter Will Label Posts with Misleading Information about COVID-19
Vaccines, CBS NEWS (Mar. 2, 2021), https://www.cbsnews.com/news/twitter-covid-19-vaccinemisinformation-labels/.
74 AD FONTES MEDIA, INC. https://adfontesmedia.com/about-ad-fontes-media/ (last visited Mar.
22, 2022).
75 Hasen, supra note 3, at 144.
76 See generally Wood & Ravel, supra note 5.
77 Matthew Spradling, Jeremy Straub & Jay Strong, Protection from ‘Fake News’: The Need for Descriptive
Factual Labeling for Online Content, 13 FUTURE INTERNET 142 (2021).
78 Pozen, supra note 17.
79 See infra notes 158-160 and accompanying text.

[p. 18]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 17/53
II. FAKE NEWS IN THE MARKETPLACE OF IDEAS
Misinformation is a pressing social problem. But why exactly did this
problem emerge? Why do some people produce false information and, more
challenging, why do other people choose to believe or share it?80
Many analyses today pin the rise of misinformation on the internet, the
greater ease of publishing and sharing information, and information’s digital
permeance. None of these factors, however, goes to the root of the issue. As
Bryan Caplan notes, these explanations suffer because they “focus[] exclusively
on the flaws of speakers, without acknowledging the flaws of the listeners.”81 What
we are missing, in other words, is a solid understanding of both the supply and
demand for false information—an understanding of the whole marketplace of
ideas.82
The marketplace of ideas metaphor imagines competition among speech acts.
Just as high-quality products will push inferior alternatives out of the market,
high-quality speech will push misinformation out of the market.83 The idea has
a powerful allure, but as noted recently by Rick Hasen, “The marketplace of
ideas is experiencing market failure.”84 Borrowing from economic theory, we
argue that the market actually suffers from not one, but two distinct failures. It
fails once because speech has spillover effects on the broader society, and it fails
again because of inherent information asymmetries between speakers and
audiences.
Spillovers and information asymmetries are different in their cause, logic,
and remedy. Conflating or ignoring these failures is a recipe for misguided and
counterproductive reform proposals. We define the market failures and leverage
them to illuminate some weaknesses and unintended consequences of common
reform proposals. This discussion builds the foundation for our reform, which
we believe avoids the pitfalls of some others. We also believe this discussion
supplies independent value by providing a framework and some key distinctions
to enrich the debate.
80 People may knowingly share false reports for a variety of reasons. Scott Alexander, The
Toxoplasma of Rage, SLATE STAR CODEX (Dec. 17, 2014),
https://slatestarcodex.com/2014/12/17/the-toxoplasma-of-rage/.
81 Bryan Caplan, Misinformation About Misinformation, BET ON IT (May 18, 2022),
https://betonit.substack.com/p/misinformation-about-misinformation?s=w.
82 Alex Tabarrok makes a similar point: “it’s an equilibrium process. The demand and supply of
misinformation both matter.” Alex Tabarrok, The Demand and Supply of Misinformation, MARGINAL
REVOLUTION (May 20, 2022), https://marginalrevolution.com/marginalrevolution/2022/05/thedemand-and-supply-of-misinformation.html.
83 The metaphor dates to Abrams v. United States, 250 U.S. 616 (1919). See also RICHARD POSNER,
THE PROBLEMS OF JURISPRUDENCE 115 (1990) (applauding the “Darwinian test” for ideas).
84 HASEN, supra note 4, at 23. For an earlier statement by an economist, see Ronald H. Coase, The
Market for Goods and the Market for Ideas, 64 AM. ECON. REV. 384, 385 (Arguing that “there is a good
deal of ‘market failure’ in the U.S. marketplace for ideas”).

[p. 19]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 18/53
A. The Spillover Problem
This section addresses spillovers, a common source of market failure. We
begin with a brief overview of spillovers and then discuss the challenges of
correcting them. Those challenges are especially acute in the context of speech
and information, presenting problems for some suggested reforms.
1. On Spillovers
Spillovers arise when people’s choices affect others. These outside effects
are often neglected by individuals and not given sufficient weight, precisely
because the decisionmaker does not bear the full consequences. When a factory
pollutes the air, its emissions harm everyone nearby. Because these harms do
not affect the factory’s bottom line, it may continue operating while imposing
this negative spillover. Negative spillovers cause people to engage in more of a
harmful activity than they should.85
Positive spillovers work similarly. When a homeowner keeps bees or
installs a light in a dark alley, she benefits herself and others too.86 The total
benefits of pollinators and light might exceed the costs. However, the
homeowner does not enjoy all of the benefits; many of them flow to other
people. So, homeowners keep too few bees and install too few lights. Positive
spillovers cause too little of the beneficial activity.
Speech suffers from negative and positive spillovers.87 Misinformation can
impose harm on the general public, as when fake reports diminish trust in
democratic institutions or social cohesion. High-quality journalism,
whistleblowing, inspiring oratory, and other forms of speech have broad
benefits. These benefits go beyond the commercial interests of speakers and
consumers of their speech. An informed citizenry is a social interest,
transcending the private interests of either the daily paper or its readers. So are
confidence in the democratic process, institutional legitimacy, the rooting out of
corruption, and checks on political excess. The problem is that speakers do not
necessarily capture those benefits.88 Consequently, quality journalism is in short
supply. Spillovers distort the market for speech.
2. Spillover Critique of Reform Proposals
85 ROBERT D. COOTER & MICHAEL D. GILBERT, PUBLIC LAW AND ECONOMICS 32-35 (2022).
86 Steven N.S. Cheung, The Fable of the Bees: An Economic Investigation, 16 J.L. & ECON. 11 (1973)
(investigating market reactions to pollination externalities to apple growers).
87 See, e.g., Daniel A. Farber, Free Speech Without Romance: Public Choice and the First Amendment, 105
HARV. L. REV. 554 (1991).
88 On the economics of investigative journalism, see Oren Bar-Gill & Assaf Hamdani, Optimal
Liability for Libel, 2 J. OF ECON. ANALYSIS & POL’Y 1 (2003); Nuno Garoupa, Dishonesty and Libel
Law: The Economics of the "Chilling" Effect, 155 J. INST’L & THEORETICAL ECON. 284 (1999); Nuno
Garoupa, The Economics of Political Dishonesty and Defamation, 19 INT’L REV. L. ECON. 167 (1999).

[p. 20]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 19/53
Spillovers diminish the capacity of an unregulated market to produce good
results. Regulation and subsidies can help by causing speakers to “internalize”
these spillovers and thus improve outcomes.89 So far, we are in agreement with
others. What has not been widely recognized in the speech debate, however, is
how easily reforms meant to fix spillovers can make matters worse. Correcting
spillovers requires precise interventions, and precision poses a difficult, practical
problem.
Consider an example. A ranch fouls a nearby stream. If the ranch operates,
the owner earns a profit of 10. The farmers downstream pay a cost from the
water pollution equal to 14. If the ranch does not operate, no one gains or loses
anything. Given these options, the ranch should not operate. The net payoff
from not operating equals 0, which exceeds the net payoff from operating (10 –
14 = –4). However, absent regulation, the ranch will operate.90 The root
problem is, quite literally, a spillover. The rancher does not pay the 14 in costs.
They spill over to the neighbors. For the rancher, operating leads to a profit of
10, so she operates, even though the net payoff for society is –4.
In this example, the market for ranching functions poorly. To correct it,
law should impose liability (in tort, or perhaps a tax) on the rancher equal to the
social harm she causes, –14. The liability causes the rancher’s personal
calculation (10 profit, –14 from the tax, for a net payoff of –4) to match society’s
calculation (10 profit, –14 from pollution, for a net payoff of –4). The tax
induces the rancher to consider all costs and benefits, not just her own, when
deciding how to act.
For this strategy to work, liability needs to have a degree of precision.
Errors in setting liability can lead to worse results. To illustrate, suppose the ranch
causes 14 in harm to the neighbors, but the court is expected to impose liability
of only 6. For the rancher, operating leads to an expected profit of 10 – 6 = 4,
which is better than not operating and earning 0. The rancher operates, even
though the net payoff from doing so equals –4. To generalize, setting liability
too low “under corrects,” failing to stop the harmful activity. The opposite
problem can arise too. Changing our example, suppose the ranch causes only 6
in harm to the neighbors, but the court erroneously imposes liability of 14. The
rancher’s payoff from operating equals 10 – 14 = –4, so she does not operate.
But society’s payoff from operating equals 10 – 6 = 4, so she should operate.91
Setting liability too high “over corrects,” stopping a beneficial activity.
The logic works the same with positive spillovers—only that now, a subsidy
rather than a penalty may be required. To illustrate, imagine flower farms. The
farms earn profits for the owners and, by supporting pollinators, benefit other
89 The idea of using taxes to internalize externalities dates to ARTHUR PIGOU, ECONOMICS OF
WELFARE, 159-175 (1932).
90 Assuming the transaction costs of bargaining between the rancher and the neighbors
downstream are high. If the transaction costs are zero, the efficient outcome will prevail. See
Ronald Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960).
91 Perhaps she should operate and also compensate the neighbors for their harm.

[p. 21]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 20/53
growers nearby. The optimal subsidy for flower farms equals the size of their
positive spillover. If the subsidy is too low, the farms will not operate, even
though they should. If the subsidy is too large, some farms will operate when
they should not.
This simple analysis illuminates some proposals to address fake news.
Earlier we described a proposal to subsidize quality journalism. This proposal
works in theory. Like the flower farm in our example, quality journalism creates
benefits that flow not just to the journalists and paying readers but to society at
large. This positive spillover implies that the unregulated market will produce
too little quality journalism. Law can correct this spillover with a subsidy. But
what’s the proper amount? If we make the subsidy too small, we might mitigate
the problem, but we will not solve it. The market will still produce too little
quality journalism. If we set the subsidy too high, we create a different, and
perhaps less obvious, problem. A too-high subsidy will generate journalism that
is socially wasteful and potentially harmful. Think of deep investigations of
esoteric issues, fierce and resource-intensive competitions among journalists to
scoop each other, and reports that simply check the box of whatever qualifies
for a subsidy or the grant. The problem is compounded by the difficulty of
setting criteria for these subsidies. The state of Iowa, for example, discovered
that 80% of its $32 million tax credits granted to support movie productions
were misspent.92 Misallocated subsidies could end up supporting partisan efforts,
possibly producing more misinformation.
Instead of promoting good information, some of the proposals we
canvassed aim to deter bad information. Consider reforming defamation law.
Making it easier for victims of defamation to sue and recover damages should
discourage lying. The argument works in theory but not necessarily in practice.93
Suppose a defamer makes a false statement that harms a person’s
reputation. The lie generates a benefit for the defamer (financial, psychological)
worth 10 and imposes a cost on the victim of 12. When defamation is very hard
to prove, the cost of 12 becomes a negative spillover. The defamer gets a benefit
from lying and pays no cost, so he keeps lying. Making defamation easier to
prove does not necessarily help. If the defamer must pay 12 in damages, then
the negative spillover disappears. But suppose the court errs and awards
damages below 10. In that case, the defamer will still lie. Or suppose the court
awards damages greater than 12. When damages get too high, victims (or people
who claim to be victims) can obtain counsel, and speakers clam up. As the risk
92 Office of Auditor of State, Report on Special Investigation of the Film, Television and Video
Project Production Program (2010). Available online at
http://publications.iowa.gov/9937/1/1060-2690-0E00.pdf
93 In practice, powerful parties have an advantage in using these mechanisms. Anti-SLAPP laws,
enacted in 32 states, reflect the recognition that defamation law is routinely abused. However,
Anti-SLAPP legislation only offers limited protection from abuse of process. For the sake of
argument, we will set these problems aside. Even so, expanding defamation law would not be a
panacea.

[p. 22]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 21/53
of errors and high damages grows, journalists might stop reporting.94 Excessive
liability, even if designed to provide redress for innocent victims, can threaten
journalism.95
Thinking in terms of spillovers highlights another shortcoming of
defamation law. Defamation law assumes that the victim suffers all of the harm,
but this is too simple. False statements not only harm the victim; they harm the
public.96 To illustrate, if a defamatory statement causes a business to lose 20%
of its profits, this harms the business. But it must also harm some customers
who were misled about the business and took their money elsewhere. This
“elsewhere” may be inferior; after all, customers could have transacted with the
alternative business in the first instance but chose not to. The aggregate loss to
customers may exceed that of the business. Even when the target of a
defamatory statement recovers for her full harm, defamation law is undercompensatory. Negative spillovers persist.
Finally, recall that defamation law only applies to false statements that harm
a person’s or entity’s reputation. It does not apply to false statements in general,
such as spurious accusations about stolen elections and bad vaccines. 97
Defamation cannot reach and therefore cannot correct negative spillovers
associated with such speech.98
To summarize, high-quality speech often has positive spillovers, so the free
market produces too little of it. Low-quality speech often has negative spillovers,
so the market produces too much. By using the tools of economics, we can
recast many proposals to address fake news as efforts to correct those
spillovers—to make speakers “internalize” more of the benefits and costs
associated with their speech. The analysis of spillovers organizes and simplifies
much of the debate about fake news. It also reveals shortcomings in some
proposals. To correct spillovers, we must price them accurately. Accuracy is
difficult enough when the spillover is water pollution that damages crops. It gets
much harder when the spillover is information that affects the choices of an
unknown number of people in unknown ways. And it is nearing impossible when
the benefits are as diffuse and ethereal as trust in democracy, checks and
balances, and rule of law.
94 England historically had strict laws and has become known for “libel tourism.” Journalists
around the world report receiving extensive legal threats that originate in England. See THE
FOREIGN POL’Y CTR., UNSAFE FOR SCRUTINY (Susan Coughtrie & Poppy Ogier eds., 2020). The
problem became so severe that Congress unanimously enacted the SPEECH Act, which makes
foreign defamation judgments unenforceable if they fail to meet U.S. standards or if they would
exceed the bounds of Section 230.
95 New York Times Co. v. Sullivan, 376 U.S. 254, 273 (1964) (“Whether or not a newspaper can
survive a succession of such judgments, the pall of fear and timidity imposed upon those who
would give voice to public criticism is an atmosphere in which the First Amendment freedoms
cannot survive.”).
96 See generally Yonathan Arbel, A Reputation Theory of Defamation Law (Manuscript, on file with
author).
97 See supra notes 47-49 and accompanying text.
98 The lack of regulation, according to some recent work, also means that the harm would be
mitigated. See Hemel & Porat, supra note 22; Yonathan A. Arbel & Murat Mungan, The Case Against
Expanding Defamation Law, 71 ALA. L. REV. 453 (2019); Arbel & Mungan, supra note 31.

[p. 23]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 22/53
B. Information Asymmetry
This section addresses information asymmetries, a source of market failure
distinct from spillovers. We first describe information asymmetries in general
and in the context of speech in particular. Then we focus on a concept central
to information asymmetries, credibility. Finally, we use our discussion of
credibility to highlight shortcomings in some proposed reforms.
1. On (Mis)Information Asymmetry
Information asymmetry arises when one party to an exchange has
information that is not available to the counterparty.99 To illustrate, suppose
the seller sells a used car. The buyer wants to buy it but is aware that some used
cars are defective. When the parties negotiate, only the seller knows whether her
specific car is in good or bad condition. The problem for the buyer is that the
seller might not disclose the condition of the car, and even if she does, the buyer
cannot take her at her word. After all, the seller might be lying when she says
that the car is in good condition. If the buyer can’t independently verify the
condition of the car, then a mutually-beneficial exchange can fall through.
The same problem applies in the context of speakers and listeners.100 A
speaker—a journalist, advertiser, politician—makes a statement. Some of these
statements reveal valuable information known to her personally, like what
happened in a private meeting “on the bottom level of an underground garage
just over the Key Bridge in Rosslyn.”101 The speaker speaks presumably because
she wants to spread her message. The problem for the speaker is that some other
speakers are disingenuous. Alongside quality journalism, there is reporting based
on lies, propaganda, and sensationalism. Just as buyers cannot tell which sellers
are trustworthy, listeners cannot tell which speakers are trustworthy. In such
instances, listeners are increasingly reliant on trust in the editorial board or outlet.
But in an age where trust in media outlets is low, such credibility signals are
unavailing. This is the information asymmetry; speakers know (or should know)
whether their speech is accurate, but listeners do not. Because of information
asymmetries, high-quality journalists find it difficult to distinguish themselves
from low-quality propagandists.
At bottom, information asymmetry presents a credibility problem—
listeners cannot tell which sources to trust, which to discount, and how much.
The problem is two sided, afflicting audiences who seek reliable sources and
99 Akerlof, supra note 21. See also COOTER & GILBERT, supra note 85, at 36-39.
100 Drawing on these ideas, Rick Hasen suggests that a central threat today is “cheap speech,” lowquality information that is cheap to produce and circulate. In his view, the consequence of cheap
speech is the erosion and possible displacement of higher value speech. HASEN, supra note 4, at 3046.
101 Bob Woodward, How Mark Felt Became ‘Deep Threat’, WASH. POST (June 2, 2005), (recounting
the Watergate affair).

[p. 24]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 23/53
speakers who want to distinguish their truthful speech from misinformation. In
a sense, the credibility problem is more central than spillovers. Imagine a world
with speakers who lie and speakers who tell the truth, and suppose the audience
knows exactly whom to trust. In this world, no one would believe speakers who
share lies, so lies could not damage reputations or otherwise cause harm.
Negative spillovers would not exist.
Scholars and others who address misinformation tend to neglect credibility
effects, perhaps motivated by the belief that individuals are not discerning
consumers of information. Public audiences naively believe what they hear. This
view neglects a robust body of research ranging from epistemology and decision
theory to evolutionary psychology and child development, from information
economics to the sociology of knowledge, and from marketing to folk wisdom.
Without going into detail, this body of research shows humans seek credible
sources, possess sophisticated cognitive capability to distinguish credible and
non-credible sources, and dismiss and discount unreliable speakers.
To give a flavor of these ideas, consider a study on child development.
Three-year-old and four-year-old children were exposed to two speakers. Both
speakers stated the names of objects that the children could see. However,
occasionally they would slip, calling a shovel a towel and a ball a cookie. The
researchers found that children not only “wrote off” unreliable speakers, they
engaged in more nuanced judgments. Four-year-olds were “able to differentiate
between an informant who was 75% accurate and an informant who was 25%
accurate and preferred to seek information from the more accurate
informant.”102 This suggests that even young children can keep a mental account
of speaker reliability and assign greater credence to sources more likely to
produce accurate statements.
Even in the animal kingdom credibility matters. Peahens prefer fit mates
whose offspring will survive in the jungle. Consequently, peacocks clamor to
advertise their fitness. But talk (really, squawk) is cheap, and peahens cannot
know whom to trust. Thus, a signal evolved for reliably sorting competent
peacocks from hopefuls: colorful and weighty plumage. Only the fittest of
peacocks can survive to sexual maturity with such luggage on their back.103
Plumage is a credible signal of fitness precisely because it attracts predators and
inhibits food gathering.104 The principle relates directly to misinformation.
Listeners, even peahens, look for credible signals. Only those who send credible
(and costly) signals, like bright and heavy feathers, can be believed.105
102 Elizabeth S. Pasquini et al., Preschoolers Monitory Accuracy, 43 DEVELOPMENTAL PSYCH. 1216,
1223 (2007).
103 Dustin J. Penn &Szabolcs Számadó, The Handicap Principle: How an Erroneous Hypothesis Became a
Scientific Principle, 95 BIOLOGICAL REV. 267 (2020).
104 This is the “Handicap Principle,” a widely accepted theory in evolutionary biology. A. ZAHAVI
& A. ZAHAVI, THE HANDICAP PRINCIPLE: A MISSING PIECE OF DARWIN’S PUZZLE, 229 (1997)
(“The investment — the waste itself — is just what makes the advertisement reliable.”). For other
examples, consider an elk’s weighty antlers or a gazelle’s instinct to jump straight up upon seeing
a predator.
105 See A. Grafen, Biological Signals as Handicaps, 144 J. THEORETICAL BIOLOGY, 517 (1990).

[p. 25]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 24/53
Back to humans, we find evidence that individuals invest intensively in
credible cues. For example, in labor markets, employers search for competent
employees. But some employees misrepresent their competence, making the
search difficult. In one famous model, job seekers use their level of education to
advertise their competence.106 Unlike standard models where better education
implies higher skills, this model uses education to advertise innate ability. To
simplify, if good workers find school less taxing and bothersome than bad
workers, then (under certain assumptions) bad workers choose less schooling
than good workers. Observing this, employers would rather hire better-educated
workers, even if schooling imparts no job-related skills.107 For our purposes, the
point is that employers search for signals that are credible (“I spent years in
school”) and discount empty statements (“I’m a good worker”).
In the context of news, we find that individuals are sensitive to credibility
cues in nuanced ways. One study shows that a liberal message on a conservative
news site commands more credibility than a liberal message on a liberal news site
(and the same holds in reverse).108
None of these studies or others purport to show that people are perfect at
credibility judgments. We have all had a five-minute conversation with the
average voter, and we all make mistakes.109 People are not always motivated to
search for the truth.110 A large scale study measured attitudes towards
immigration among thousands of participants.111 People often exaggerate the
number of immigrants in the country. The study measured attitudes towards the
desirable scope of immigration before and after informing respondents on the
actual number of immigrants. Respondents indeed changed their mind about the
number of immigrants, but not on their attitudes towards immigrants.
Correcting people’s misperceptions with accurate information had no effect.112
Still, these local failures should not distract from the remarkable ability of
humans to make complex credibility judgments in many circumstances. We
process many types of credibility cues, often unconsciously and rapidly, and
reject or discount statements made by unreliable sources.113 Critically, people are
sensitive to speaker incentives, recognizing that costly signals are more reliable
106 Michael Spence, Job Market Signaling, 87 Q. J. ECON. 355 (1973).
107 For supporting evidence, see BRYAN CAPLAN, THE CASE AGAINST EDUCATION, 96-123 (2018).
108 Megan Duncan, What’s in a Label? Negative Credibility Labels in Partisan News, JOURNALISM &
MASS COMMC’N Q. (Oct. 13, 2020),
https://journals.sagepub.com/doi/10.1177/1077699020961856.
109 This statement is attributed to Winston Churchill. Michael Richards, Red Herrings: Famous Quotes
Churchill Never Said, INT’L CHURCHILL SOC. (June 9, 2013),
https://winstonchurchill.org/publications/finest-hour/finest-hour-141/red-herrings-famousquotes-churchill-never-said/.
110 See, e.g., Nyhan, supra note 3, at 226 (“many seem especially susceptible to misperceptions that
are consistent with their beliefs, attitudes, or group identity”).
111 Daniel J. Hopkins, John Sides, & Jack Citrin, The Muted Consequences of Correct Information about
Immigration, 81 J. POL. 315–320 (2019).
112 Id.
113 See also Nyhan, supra note 3, at 226, at 229 (providing evidence that on many issues individuals
learn and converge on true beliefs, even if the process is slow and incomplete).

[p. 26]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 25/53
than cheap ones. We thus think it is a mistake for scholars to neglect credibility
issues when they design reform proposals.
2. Information Asymmetry Critique of Reform
Proposals
Information asymmetries can be hard to overcome. Take the example of
the seller and the buyer. The seller’s car is high quality, but the buyer thinks
otherwise. Can the seller correct this asymmetry simply by stating, promising,
or asserting that her car is high quality? Probably not. Talk is cheap, and the
seller might lie. In the news context, the same problem applies. It is not enough
for a journal to proclaim that it does “honest reporting” or for a pundit to claim
that they “tell things as they are.” Speakers can swear fidelity to the truth until
their faces turn blue. To change minds and behaviors, listeners must believe
them. Speakers must be credible.
Recognizing the importance of credibility draws attention to the
importance of listeners. We must be attentive to listeners’ credibility judgments
when considering policy. Consider labeling, as when Twitter flags a dubious
story. Effective labeling requires (among other things) that the labeler know the
truth of the matter. But labelers do not always know the truth, and most people
surely recognize this. Moreover, labeler bias looms large. A recent study found
that black, transgender, and conservative individuals are targeted most often for
content moderation.114 Consequently, labeling is a double-edged sword. In
attempting to address one credibility problem (should readers trust the story?),
it introduces a second credibility problem (should readers trust the labeler?).
Even if labelers were trustworthy, and perceived as such, labeling would
still have a potential weakness, as the following study shows. Researchers
measured the effect of labeling misinformation on the beliefs of 5,271
participants.115 Consistent with expectations, they found that a negative label
made subjects less likely to believe the story.116 Encouragingly, they found that
labels had a strong effect on people whose political view aligned with the story.
That is, people were willing to discount a story that supported “their side” if it
was flagged.117 The unexpected finding concerns the effect on unlabeled stories.118
Participants were more likely to believe unlabeled stories than before.
114 Oliver L. Himson et al., Disproportionate Removals and Differing Content Moderation Experiences for
Conservative, Transgender, and Black Social Media Users: Marginalization and Moderation Gray Areas, 5
PROCEEDINGS OF THE ACM ON HUMAN-COMPUTER INTERACTION 1 (2021). This survey-based
analysis cannot distinguish between algorithmic and human curation.
115 Gordon Pennycook et al., The Implied Truth Effect: Attaching Warnings to a Subset of Fake News
Headlines Increases Perceived Accuracy of Headlines Without Warnings, 66 MGMT. SCI., 4944 (2020).
116 This is consistent with other findings. See Timo Koch et. al., The Effects of Warning Labels and
Social Endorsement Ces on Credibility Perceptions of and Engagement Intentions with Fake News 21, (June 13,
2021), https://psyarxiv.com/fw3zq/;Megan Duncan, What’s in a Label? Negative Credibility Labels in
Partisan News, JOURNALISM & MASS COMMC’N Q. (Oct. 13, 2020),
https://journals.sagepub.com/doi/10.1177/1077699020961856.
117 Pennycook et al., supra note 114. See also Duncan, supra note 116, at 49.
118 The researchers verify their findings in a separate experiment where some stories are labeled as

[p. 27]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 26/53
Apparently, participants conflated stories that had been reviewed and
deemed accurate with stories that had never been reviewed. If this finding is
robust, then labeling might, all things considered, worsen the information
environment by making readers too accepting of unexamined stories.
One way to address this problem would be to increase the reach of labeling
efforts. If everything gets reviewed, then the absence of a label must mean that
the information is accurate. This is impossible under existing practices and
reform proposals. Worldwide, people and organizations (and bots) produce and
share a massive amount of information daily. This information is produced in a
decentralized way and shared across multiple platforms and networks. No
existing system can label such flows of information comprehensively and in real
time. At best, people can label a small subset of the information, often after the
fact. To demonstrate, consider the Washington Post’s award-winning “Fact
Checker.” The Fact Checker is a small team of journalists that runs a handful of
stories every week investigating statements by important figures.119 Meanwhile,
the Washington Post itself produces over 1,000 stories, videos, and graphics per
day.120
Algorithms have been proposed as a solution to the scaling problem.
Algorithms have much promise but also raise many problems.121 One is that
algorithms are often a black-box that outsiders struggle to understand and that
produce biased results. Another is the difficulty of algorithms in making
judgments based on a broader context.122 Once again, labeling attempts to solve
one credibility problem by introducing another one, this time about algorithms
and their biases.
Moving away from labeling, we next consider censorship, collateral
censorship, and content moderation. Putting aside the moral, political, and
institutional concerns, the removal or filtering of information can have
unintended consequences in the presence of information asymmetries. Like
labeling, truth-based content moderation requires that human moderators (or
algorithms) have privileged access to the truth. Even in the domains where this
is plausible (e.g., issues on which there is a scientific consensus), censorship and
moderation can project an aura of reliability on all published communications,
stories that have not been vetted. They find that subjects place less faith in these unverified stories.
Pennycook et al., supra note 114, at 4944.
119 Glenn Kessler, About the Fact Checker, WASH. POST (Jan. 1, 2017),
https://www.washingtonpost.com/politics/2019/01/07/about-fact-checker/.
120 Robinson Meyer, How Many Stories Do Newspapers Publish Per Day?, ATLANTIC (May 26, 2016)
https://www.theatlantic.com/technology/archive/2016/05/how-many-stories-do-newspaperspublish-per-day/483845/.
121 See, e.g., Van Alstyne, supra note 8, at 7 (Noting that algorithms are subject to an arms race, as
prodcuers of false information are likely to find ways to circumvent the filters).
122 See CITRON, supra note 10, at 232 (2014); Danielle Keats Citron, Section 230’s Challenge to Civil
Rights and Civil Liberties, KNIGHT FIRST AMENDMENT INST.n.41 (2018). Algorithms can increasingly
approximate humans in reading and assessing data. See Arbel & Becher, Smart Readers, GEO. WASH.
L. REV. (forthcoming, 2022).

[p. 28]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 27/53
the theory being that misinformation has been screened out.123 This is not
illogical; enhanced trust is a reasonable response to information gatekeeping. But
gatekeeping is necessarily imperfect. Some misinformation will slip by the
censors, and when it does people might place greater trust in it than ever. Of
course, consumers might react differently. They might question the reliability of
the censors, in which case they might place less trust in filtered content than in
unfiltered content. (Consider the reaction of some Russians to state media.)
Whereas the private removal, blocking, or filtering of online speech aims
to reduce the supply of false information, subsidies aim to increase the supply of
truthful information. If subsidies work, they lead to more accurate information
in circulation and enhanced trust. But enhanced trust means that the occasional
false story will penetrate more deeply. In such cases, misinformation becomes
more persuasive than before, even if it constitutes a smaller share of all
information. (Censorship raises the same problem.) For consumers who are
not passive, who attempt to make credibility determinations, and who know
something about the law—for example, that journalists get subsidies—the effect
of subsidies is even harder to predict. Savvy consumers might wonder about the
motivations of the actors handing out subsidies. Would conservative readers
trust newspapers that receive subsidies from liberal legislators?
Of the common reform proposals, expanding defamation law comes
closest to addressing information asymmetries. To see why, consider a recent
study.124 Participants were given a few reports, a newspaper clip, a television
screenshot, and a social media post. All of those sources of information related
to an article, which the participants also received. The participants were asked
to evaluate the credibility of the article. The participants were split into two
groups, one instructed that they live in a state where defamation law is effective
(liars pay damages), and the other in a state with ineffective defamation law. The
study found that defamation laws elicit a clear response. Effective defamation
law made participants more trusting of the news, whereas ineffective defamation
law led participants to express suspicion and doubt.
This study suggests that defamation law can facilitate credibility judgments
by listeners. Knowing that someone was not sued for defamation suggests that
their speech was truthful. More generally, this study suggests that law can have
persuasive power. Changing how we regulate information changes public
perceptions of its credibility.
Still, defamation law has shortcomings. One involves its limited reach.
Defamation law is inapplicable to general speech or many matters of broad
public interest. It requires an identifiable victim who has suffered reputational
harm.
123 Arbel & Mungan, supra note 98; Hemel & Porat, supra note 22.
124 Yonathan A. Arbel, The Credibility Effect (Manuscript on file with authors).

[p. 29]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 28/53
Separate from this problem, defamation law can only do so much to
enhance credibility. Like a 1960s television, defamation law produces a lowquality picture. The problem grows from the complexity of the law125 and,
relatedly, the challenge of predicting liability.126 Suppose the local newspaper
runs a story about a teacher alleged to have defrauded the school system. The
higher the expected sanction to the newspaper for defamation, the more an
observant reader would find the story believable. But can a reader know the
expected sanction? Damages in tort law depend on a complex, protracted
process, which—in the context of defamation—involves “presumed” damages
with little actual proof. Even lawyers struggle to agree on an acceptable range.
As a result, liability will be determined by a semi-random assortment of factors
concerning the particular effect the publication had on the specific teacher,
whether he lost his employment, whether he was retained by a different school,
whether he had to undergo therapy, and whether his partner deserted him over
the allegation. All of this is entirely opaque to the reader at the time of reading,
introducing considerable noise into the signal.127
Defamation law can produce a noisy signal in another way. Suppose a court
correctly finds for the victim in a defamation suit. On the optimistic view, this
makes the community adopt a more favorable view of the victim, perhaps even
completely restoring her tarnished reputation. But what if the victim never sues?
Victims are heterogenous. Some are rich, sophisticated, powerful, and litigious;
others are none of those things. A study presented participants with a report
accusing a blogger of trying to blackmail the mayor.128 One group of participants
was told that defamation laws are highly effective, and the other group was told
the opposite. Participants were asked to evaluate the credibility of the story
assuming the blogger (the victim) did not file a lawsuit. The study showed that
failing to bring suit acted as a powerful signal. Participants in the effective
defamation group were more than three times as likely to believe the accusations
against the blogger. Because we know that not all victims sue, even when they
have a valid claim, this finding reveals a problem. Failure to sue for defamation,
regardless of the reason, may cause people to infer that a false accusation was
true.
The last concern marries information asymmetries and spillover concerns.
Defamation law can encourage all-or-nothing decisions. Either the publisher
decides to publish or not. This is not ideal. In the real world, there is nothing
like perfect knowledge. The seller of a car will not always know its mechanical
condition with perfect accuracy. A journalist will often have a nuanced
understanding of the veracity of a story. Almost no story is unassailably true, and
almost no source is beyond reproach. With defamation law, journalists drop
stories when there is sufficient doubt—although some of the doubtful stories do
125 PROSSER ET AL., PROSSER AND KEETON ON THE LAW OF TORTS, 771 (1988) (“the law of
defamation is full of absurdities and anomalies for which no legal writer has haver had a kind
word.”).
126 This issue afflicts audiences and speakers, but we focus only on audiences.
127 Newspapers also face this uncertainty, and it carries chilling consequences for publishing
decisions.
128 Arbel, supra note 124.

[p. 30]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 29/53
have merit and should be published. But the publisher has to worry about its own
liability rather than the public value of the story. And so publishers may shy away
from contested issues, their public import notwithstanding.
Ideally, information providers would be able to communicate not just the
information itself, but also their degree of confidence. If a reporter knows the
source has a conflict of interest, it will be better to communicate this fact
alongside the story—even if the reporter still finds the source credible. And if a
story is marginal, it might be better to publish it along with the reasons that the
editorial board found it doubtful than not to publish it at all. Defamation law
does not encourage this type of behavior.
*****
In sum, we have argued that speech suffers from two market failures,
spillovers and information asymmetries. Because of spillovers, we have too
much bad information and not enough good information in circulation. Because
of information asymmetries, consumers cannot tell which sources to trust. If
consumers do not trust them, high-quality speakers like professional journalists
will communicate less or stop communicating entirely. These two market failures
call for distinct solutions, each with their own challenges. Fixing spillovers
requires a degree of precision in the regulatory response, which in turn requires
a hard-to-evaluate assessment of the scope of incentive misalignment. Fixing
information asymmetries requires solutions that will increase truth-telling and
also public trust.
Ideally, solutions would address both of these problems at the same time.
We cannot achieve this ideal, but we can move in this direction. We need a
strategy for reform that will help people identify trustworthy sources. The
strategy must comply with the law, including the First Amendment. It should
operate ex ante, meaning before information circulates, not after the fact. It
must operate at scale, meaning a significant portion of the information in
circulation, not just bits and pieces, can be labeled, tagged, or otherwise sorted
so that consumers know what to trust. Finally, the strategy must account for
credibility, which sits at the heart of information asymmetry. The next Part
presents such a strategy.

[p. 31]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 30/53
III. TRUTH BOUNTIES
Here we sketch a solution to misinformation: truth bounties. We develop
a system built on voluntary pledges of conditional payments by speakers. The
bounty would act as a promise or a bond that the speaker’s statement is true. If
the statement proves to be materially false, the speaker would lose the bounty.
In offering a truth bounty, speakers would signal that they have confidence in
the truthfulness of the information they share—so much confidence that they
are willing to put money on the line.
Our solution is private and voluntary and operates based on contracts.
Thus, it functions outside of public law, avoiding obstacles like the First
Amendment. Unlike other reform proposals, ours works ex ante; speakers post
bounties before their information disseminates. Our solution also operates at
scale. Millions of communications could operate in the system we develop.
More importantly, our solution addresses the central challenge facing
information consumers in the digital age: credibility. Knowing that speakers have
something to lose should make consumers more confident in their speech. By
seeing how much speakers post, listeners can also learn something very
important about the reliability of the information. Bounties send a finely tuned
signal.
This Part explains our solution in detail, beginning with its conceptual
roots.
A. Skin in the Game
Law often improves behavior through sanctions. People drive safely,
respect others’ property, and refrain from littering because doing otherwise will
lead to some kind of negative consequence, whether imprisonment, a fine, or
the payment of damages. Law forces people to put “skin in the game.” They
have something to lose—money, freedom—if they act wrongly, and this
encourages them to act rightly. In the context of misinformation, many
regulatory measures and proposals adopt this logic. They aim to sanction, in one
way or another, the purveyors of lies.
Sometimes sanctions can do more than harm wrongdoers. They can help
“rightdoers.” A primary benefit of sanctions for misinformation is that they
benefit honest purveyors of information by making their communications
credible. To illustrate, suppose a seller advertises a product as having high quality
and promises to deliver it tomorrow in exchange for a payment from the buyer
today. The buyer would like the product if it is indeed high quality, but can she
trust the seller? Talk is cheap, and the seller might send a low-quality product.
Contract law overcomes the problem by threatening the seller with a sanction.129
If she fails to deliver the product as she warranted, the buyer can sue for
129 Criminal law has this feature too, although it is only used for severe transgression. See Alvarez,
567 U.S. 709 (2012).

[p. 32]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 31/53
damages. Contract law forces the seller to put skin in the game. If she breaks
her promise, she will have to pay.130 The threat of this sanction does not
necessarily harm the seller. She wants buyers to trust her, and having skin in the
game helps. The threat of liability makes her promises credible.131
The same idea operates in other areas of law. Manufacturers sell toasters,
lawn mowers, medicines, and electric cars. They make representations about
these products, such as “it has a range of 300 miles.” They want consumers to
trust these statements and buy the products. Contract law regards these
statements as warranties, compelling the manufacturer to pay if the product fails.
In addition, consumer protection laws, including prohibitions on fraud and false
advertising laws, make the representations trustworthy.132 If the carmaker lies
about the range, regulators will issue a fine, consumers and competitors will sue,
or both. Law forces the manufacturers to put skin in the game, and this tends
to help honest manufacturers. Having something to lose signals to consumers
that they tell the truth.133
To summarize, law forces some people who supply information to put skin
in the game, and this has two effects. It discourages some dishonest
communications, and it makes the remaining communications credible.134
Knowing that lies get punished increases trust in information.
We are interested in information in general, including information about
politics and current events, not simply promises from sellers or representations
about products. Can existing law force people who produce information in
general to put skin in the game? Only to a limited degree. We have explained
that defamation law only applies to information about specific people (“he
robbed a bank”), not information in general (“Vaccines are fake”). 135
Furthermore, public figures like celebrities and politicians must prove actual
malice to succeed in a defamation suit.136 That high bar is hard to meet, meaning
purveyors of false information often escape, and know they can escape,
liability.137
130 Note that warranties transcend (some) requirements, meaning that warranties are applicable
also to users of the product who are not purchasing directly from the manufacturer. See Richard
E. Speidel, Warranty Theory, Economic Loss, and the Privity Requirement: Once More into the Void, 67 B.U.
L. REV. 9, 11 (1987).
131 See ROBERT COOTER & THOMAS ULEN, LAW & ECONOMICS (6th ed. 2011).
132 Consumer protections include products liability, which is complicated and may have many
effects. See generally Keith N. Hylton, The Law and Economics of Products Liability, 88 NOTRE DAME L.
REV. 2457 (2013).
133 See, e.g., MARK A. GEISTFELD, PRODUCT LIABILITY LAW, 355 (2nd ed. 1999) (“There are good
reasons for expecting that the prospect of liability gives sellers an incentive to invest in safer
products.” ).
134 So long as courts cannot determine the truth with full accuracy, liability rules also chill some
honest speech. For the law to produce a credible signal, consumers must believe that, on average,
published statements are likely to be true. Their propensity to believe also depends on the costs
of mistakes. For a full analysis, see Arbel & Mungan, supra note 31.
135 Id.
136 New York Times Co. v. Sullivan, 376 U.S. 254 (1964).
137 One can put skin in the game without law. Many newspapers try to report truthfully not only

[p. 33]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 32/53
In sum, having skin in the game should make producers of information
more honest and trustworthy. But getting skin in the game is difficult.
Defamation law applies only to some information producers. The First
Amendment and other obstacles discussed earlier prevent law from doing much
more. Reputation is limited in crowded and dynamic information environments.
This does not mean the skin-in-the-game theory fails. Having something to lose
should make statements more credible. However, law prevents us—lawmakers,
regulators, ordinary citizens—from forcing most information producers to put
skin in the game.
B. The Voluntary Pledge
When sticks fail, carrots can do the trick. We propose a system built on
voluntary, conditional payments by speakers. We call the conditional payment a
truth bounty. The bounty would act as a promise backed by a bond that the
speaker’s statement is true. If the statement proves to be materially false, the
speaker would lose the bounty. In posting a bounty, people would signal that
they have confidence in the truthfulness of the information that they share. In
choosing the size of the bounty, people could express not just their confidence,
but also the degree of their confidence.
The bounty could not be too small, lest it be ineffective. If a person
pledged, say, $1, no one would take it seriously. This would not amount to
putting skin in the game. On the other hand, the bounty could not be too large.
If the system required a bounty of, say, $10 million, many people would not have
the resources to use the system, and the people who did would worry—and thus
be overly cautious in their expression—to avoid any mistakes. They might lose
a fortune without good cause. We will say more about mistakes later. For now,
the point is simply that the optimal bounty presents a Goldilocks problem—not
too small, not too large.
Who would set the amount of the bounty? In principle, the decision could
be left to the speaker or set by the bonding system accepting the bounty.138 The
former would allow speakers to set an amount that corresponds to their level of
confidence in the story. The higher the confidence level, the larger the bounty.
It would also allow for flexibility based on resources. A $1,000 bounty would
mean more coming from a local newspaper or an independent investigative
journalist than from a large company like CNN. On the other hand, having the
system set the bounty could promote consistency and standardization. For
because they fear liability for defamation but because they fear a loss of reputation. Reputations
for truthfulness pay off in terms of subscriptions, ads, and readership, and spreading misleading
information would squander a good reputation. But reputation is not a panacea. See generally
Yonathan Arbel, Reputation Failure and the Limits of Market Discipline, 54 WAKE FOREST L. REV. 1239
(2019).
138 The Magnusson-Moss Act attempts to standardize the form of certain warranties, but much
like our proposal does not require that any warranties be extended. 15 U.S.C. § 2301 et seq.

[p. 34]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 33/53
information consumers, those virtues might make truth bounties easier to
understand.
In the simplest implementation, the speaker would deposit the truth bounty
in escrow managed by a third party. This solution might not work well at scale.
Mass speakers like the New York Times probably would not want to tie up so
much capital in escrows. As an alternative, the speaker could post collateral, or
a third party like an insurance company could underwrite the speaker’s
publications. This would limit the capital requirements for the speaker and
enable them to use the system at scale.139
Information producers would advertise their truth bounties. This could be
accomplished in various ways. For written communications, a natural way would
involve the use of an icon. Imagine a news organization publishing a story on
its website. An icon could appear next to the headline indicating that the story
has a bounty. The icon would be standardized. Over time, users of the system
would learn its meaning, just as people have learned to recognize trademarks like
McDonald’s arches and security icons deployed online to suggest secure
commercial transactions. The icon would tell information consumers, whoever
and wherever they are, that the news organization feels so confident about the
story that it put money on the line. The following figure illustrates a possible
implementation.
$10,000
We started this section by contrasting sticks and carrots. We cannot force
information producers to put skin in the game, but we can encourage them by
offering something of value. In exchange for a truth bounty, they get the icon.
For the reasons explained below, the icon symbolizes credibility. Seeing the
amounts of money newspapers and other publishers spend on advertising their
quality and reliability, there are good reasons to believe that many information
producers would voluntarily pay for credibility.
139 One might worry about the moral hazard and adverse selection inherent to any insurance
scheme, but remember that insurers have various ways to ameliorate these problems. See Steven
Shavell, On the Social Function and the Regulation of Liability Insurance, 25 GENEVA PAPERS ON RISK
AND INSURANCE 166 (2000).

[p. 35]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 34/53
C. Challenges and Fees
How does a truth bounty promote credibility? If the bounty is simply a
loan—a third party holds the money for a while and then returns it—then the
bounty and icon are meaningless. Speakers must bear risk. If a communication
with a bounty attached turns out to be false, the speaker must lose the bounty.
This is the key to the system.
To introduce risk, we propose a decentralized system of challenges.
Suppose a reader sees a story with the icon indicating a bounty. Further suppose
that the reader concludes that the story is false. Under a defamation regime, there
is little the reader can do—unless he or she happens to be discussed in the story,
and even then the legal hurdles are substantial. Under our proposed system, the
reader could initiate a challenge. This is a critical feature of the system. Any
member of the public could initiate a challenge to any communication with a
bounty. Unlike defamation law, the system would not limit claims to the targets
of specific allegations—it does not require any allegations at all.
Challenges could proceed in different ways, but for communications on the
internet, a straightforward way would involve clicking on the icon. Doing so
could bring challengers to a website. Information on the story in question—
title, date, publisher, author, etc.—would load automatically, and the challenger
could pursue her complaint.
Whether out of malice or ignorance, people could clog the system with
meritless challenges. To mitigate this problem, the system could charge a
challenge fee. The fee would force the challenger (whether a natural person or
an entity) to put skin in the game. Like court fees, paying the challenge fee
signals that the challenger has confidence in the merits of her claim.
As with the bounty, the challenge fee presents a balancing act. A small fee
would fail to screen out meritless challenges, but a large fee could block even
meritorious challenges. A similar problem arises when setting a court’s filing
fees.140 One approach would be to make the challenge fee a single-digit percent
of the bounty subject to some minimum. In any event, experience would inform
the optimal amount.
After paying the fee, the challenger would have an opportunity to present
her initial challenge. Basically, she would explain why she believes the story to
be false. This process could take many forms. One approach would allow the
challenger to present her argument in writing on the website and upload
supporting files (images, audio, video). Afterwards the speaker would have an
opportunity to rebut the challenger’s initial complaint, again with text and
possibly supportive files. This simple approach would not involve motions, oral
arguments, or other trappings of a trial.
140 See generally COOTER & ULEN, supra note 131, at 420-422.

[p. 36]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 35/53
The goal of this initial step would be to create a simple plausibility review.
The challenge fee would also serve this function, but it could not prevent a deeppocketed challenger from clogging the system. The bounty system—the entity
collecting bounties and challenge fees and creating the icon—would conduct the
plausibility review. The goal would be to screen out meritless claims: they are
incoherent, have no evidence, make fantastical accusations, etc.
Assuming the challenger clears this bar, the case would proceed to
arbitration.
D. Arbitration
The challenge would be resolved by arbitrators. The arbitral process could
be informal and flexible, or it could resemble a trial. One could imagine other
approaches between these poles. One could imagine presenting the parties with
a menu of approaches from which they choose. We will not canvass specific
possibilities but rather focus on some general features.
The arbitrators would be private actors. To avoid legal obstacles, nothing
in the system requires state action. People would not get dragged into court
against their will. No state or federal judge would assess the truthfulness of, say,
someone’s political speech, a possibility that raises serious concerns under the
First Amendment. The system would be both voluntary and private, although
some of its infrastructure might be provided by law.141
To build confidence in the system, arbitrators should be high-profile people
with reputations for trustworthiness. As the system gains traction, the pool of
arbitrators could broaden to encompass subject matter experts. Panels may
include non-lawyers. Although helpful, training in law might not always be
necessary.
To further build trust, the following mechanism could be used. The parties
to a challenge could select an arbitrator from a pool. Each party would select
one arbitrator, and the selected arbitrators would select the third, tie-breaking
arbitrator. This system, which is common in arbitration, diminishes the risk of
bias and appearances of bias. Selecting the decisionmaker creates legitimacy and
makes it harder to complain about the outcome.
What exactly would the arbitrators decide? They could not decide whether
a challenged communication is actually true or false. Deciding on the actual
truth or falsity of a proposition raises deep challenges at the core of
epistemology.142 To demonstrate, readers probably assume (as do we) that the
141 For example, arbitration awards are subject to legal review under certain, restrictive, conditions.
See Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).
142 See generally ALVIN I. GOLDMAN, EPISTEMOLOGY AND COGNITION (1986).

[p. 37]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 36/53
earth revolves around the sun and the moon is made of rocks, not cheese. But
do we really know? Have you studied astronomy or tasted moon dust?143
Like judges and jurors in the formal legal system, the arbitrators would
adopt a practical approach to truth guided by legal standards. Recall our news
organization publishing a story on its website. In posting a bounty, the
organization would not promise that every word is true, with no subsequent
disproval possible. Such a promise would demand too much. A single error in
a name, date, or location could cost the organization its bounty. Furthermore,
some elements of a story might involve opinions, not facts. Opinions can be
silly, uninformed, or whatever else, but adjudicating their falsity is either
impossible or fraught with error.
For these reasons, posting a bounty would not commit the speaker to
absolute truth. Rather, the speaker would commit to a standard. The optimal
standard could be determined through experience (and perhaps vary by subject
matter or industry). As a starting point, we suggest the following: “This
information, taken as a whole, is materially accurate and not misleading.” The
challenger’s burden would be to show that the information is materially
inaccurate, or the information is misleading.
The term “materially” does important work. In general, small errors such
as misspelled names or botched dates would not be material to the content of a
story or other communication. Indeed, even defamation law does not consider
these types of mistakes.144 Thus, speakers could post bounties without fear of
losing over a typo or silly mistake.
The materiality requirement and the “taken as a whole” language in our
standard would require that the accuracy of a communication be assessed in a
time-bound manner. The question is not whether the communication is accurate
forevermore. The question is whether it was accurate at the time the bounty was
posted given the information reasonably available to the speaker. To illustrate,
suppose a person claimed in the year 1500 that the sun revolved around the
earth. This was false, but the speaker could not reasonably have been expected
to know that (Galileo came a century later). Liability for truth must account for
what could have been known.
Under our proposed standard, a challenger could win by showing that a
communication is “misleading.” A story can be accurate but misleading at the
same time, as when a person truthfully reports the findings of one scientific study
143 See, e.g., Richard Posner, The Jurisprudence of Skepticism, 86 MICH. L. REV. 827, 836 (1988) (“Many
scientific theories, including natural selection and the "big bang," are not verifiable by
experimentation or any other method of exact observation; many have been proved false after
having been universally accepted. . . many. . . are temporary or ad hoc constructs to explain
phenomena that might be explained in other ways”.).
144 KEETON ET AL., supra note 124, at 842 (explaining that in defamation law “it is not necessary to
prove the literal truth of the accusation in every detail, and that it is sufficient to show that the
imputation is substantially true, or, as it is often put, to justify the ‘gist,’ the ‘sting,’ or the
‘substantial truth’ of the defamation.”).

[p. 38]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 37/53
but then generalizes from it, without bothering to mention other, equally credible
scientific studies that reach different conclusions. Thus, the terms “accurate”
and “not misleading” in our proposed standard do independent work. Of course,
demands for context are endless. The standard does not require one to provide
every piece of illuminating information, only information that is critical to the
proper interpretation of the statements.
The arbitrators would decide whether the challenger met the burden as laid
out in the standard. In doing so, they would have to rely on a burden of proof.
We suggest preponderance of the evidence. The question becomes: has the
challenger shown by a preponderance of the evidence that the information, taken
as a whole, is materially inaccurate or misleading? This will strike some readers
as a low bar. We believe, however, that users of the system would welcome it
(the standard mirrors defamation between private individuals). People and
organizations would post bounties to build credibility. Compared to clear and
convincing evidence or beyond a reasonable doubt, the preponderance of the
evidence standard would make it easier for a challenger, thus increasing the
credibility effect. At the same time, speakers need not worry about an onslaught
of try-your-luck challenges due to three internal checks. The challenge fee and
plausibility review offer the first two gatekeeping functions; the fee-shifting rule
elaborated below is the third. A preponderance standard coupled with these
screens would seem to strike a sensible balance. “The story is likely to be accurate
and not misleading,” a reader might reason, “because otherwise someone would
bring a challenge and win.”
Later we will provide some specific examples of how arbitration might
work in practice. For now, we will conclude with two general points. First, a
functional system would require decisions about many details: the formality of
the process, motions and evidence, whether there are oral arguments, appeals,
and so on. Those decisions raise an important tradeoff. Adopting a simple,
informal process should tend to lower costs but cause more errors.145 With few
steps and limited evidence, errors would be inevitable, as when a true story is
deemed false, or vice versa. Conversely, adopting a sophisticated, formal process
should tend to increase costs but cause fewer errors. Obviously fewer errors
would be better, but costs are not irrelevant. No one would use the system if it
became too costly in time, money, or effort.146
Here is the second point. Our proposed standard would necessarily require
arbitrators to exercise judgment. Does the alleged omission make the story
materially inaccurate? Does that phrasing make the story misleading? Like
ordinary people, different arbitrators would reach different judgments on those
questions in some close cases. Other standards would inevitably raise versions
of the same problem. No matter how the standard is phrased or the burden of
proof defined, arbitrators would sometimes disagree, different arbitral panels
145 COOTER & ULEN, supra note 131.
146 Id.

[p. 39]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 38/53
would sometimes reach different decisions in the same dispute, and observers
would sometimes disagree with arbitral decisions.147
We do not believe this problem is fatal. The formal legal system suffers
from this problem, yet it appears to function well much of the time, especially in
private disputes like the ones we imagine. Arbitral panels could write and publish
short opinions explaining their decisions. As with judicial opinions, this might
temper some backlash.148 Having a strong suite of arbitrators, steeped in
journalistic norms, would go a long way—and having the funds to recruit them,
makes this option viable.
Importantly, speakers could hedge their communications to avoid the
uncertainty inherent in close cases. Speakers who want to avoid finding
themselves with a marginal case could either conduct more investigations to
support their communications or, in the alternative, hedge and qualify the
language they use. They could add qualifying language to their communications,
explicitly distinguish opinions from facts, and otherwise make editorial choices
that turn “borderline” communications into “clearly accurate and not
misleading” communications. This would, of course, be a virtue.
E. Rewards and Signals
After the arbitrators reached a decision, two things would happen: money
would change hands, and the outcome would become public. To begin, we
discuss the money. If the challenge succeeds, the challenger gets the bounty. To
make it concrete, if the Tuscaloosa Today pledged $10,000 on a story, and if a
challenger convinced the arbitral panel that the story is materially inaccurate, the
challenger would get the $10,000. On the other hand, if the challenge failed, the
bounty would remain intact.
The possibility of making money would encourage challengers, which
would be important to the system, especially in its formative period. One could
think about this feature of the system as outsourcing the search for truth.
Challenges mean people are consuming information, recognizing the “bounty”
icon, hunting for inaccuracies or misleading statements, and attempting to root
them out. For some, the ability to refute falsities would be enough to earnestly
participate. For others, the money would provide the incentive. For some,
having the money come from the speaker would sweeten the deal. A fierce critic
of Fox News would not only like to receive $10,000, he might take pleasure in
knowing that Fox News had to foot the bill.149
147 See, e.g., Anthony Niblett & Albert H. Yoon, Judicial Disharmony: A Study of Dissent, INT. REV. L.
ECON. 42, 60–71 (2015).
148 William C. Vickrey et al., Opinions as the Voice of the Court: How State Supreme Courts can Communicate
Effectively and Promote Procedural Fairness, NAT’L CENTER FOR STATE COURTS (2012) (Arguing that
“rulings communicate not only to lawyers but also to the public and media and explain how courts
resolve disputes and determine constitutional rights.”).
149 Cf. Andrew T. Hayashi, The Law and Economics of Animus, 89 U. CHI. L. REV. 581 (2022).

[p. 40]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 39/53
So far, we have abstracted from the costs of running the system. In reality,
operating the system, marketing its services, and performing arbitration would
cost a lot. Much like the legal system, these costs must be funded. We believe
the source of funding should not be the bounty itself. Instead of taking a portion
of the bounty, funds could come from three other sources: initial fees paid by
speakers that are independent of the bounty; the challenge fees; and, much like
any other arbitration process, the parties themselves.
Parties to arbitration often pay for the arbitral process. However, we would
augment that usual system with a critical design choice: fee shifting. Under the
so-called American Rule, each party bears its own litigation costs. Under the
English rule, which we endorse for this system, the loser pays for the process.
In our context, if the challenger succeeds, the speaker loses the bounty and pays
for the arbitration. If the challenger fails, the challenger pays the arbitrators.
Scholars have concluded that the English rule discourages weak challenges
and encourages strong ones.150 The intuition is straightforward. By increasing
the cost to challengers whose challenges fail, fee shifting would push them to
bring only strong challenges, meaning challenges likely to succeed. We believe
that, for our system, this is a desirable feature. Given the inherent uncertainty in
determining truth, it is desirable to have fewer costly arbitrations with close
cases, while making clear-cut, winning cases easier to bring. Although the system
we envision could not adjudicate with perfect accuracy the truth or falsity of
every possible communication, it could effectively refute stories that are clearly
false. That would be immensely valuable, and the English rule would help
achieve that goal.
In addition to money changing hands, arbitration would result in publicity.
The outcome of arbitration—whatever it is—must be publicized. Publicity could
come through different channels. The winning party would naturally want to
publicize their winning—“we successfully refuted the claim that X was taking
bribes.” But some challengers would have smaller platforms than others, and
from experience we know that parties can misreport the outcomes of
proceedings. Hence, the system would function better with a formal, centralized
method of reporting outcomes.
In the context of digital communications, this could happen through the
icon—the same icon that indicates a communication has a bounty. The icon
could be adjusted to send different messages. To begin, the icon could be, say,
light green, indicating the information has a bounty but has not been challenged.
After a challenge has been filed but before it has been resolved, the icon could
(explaining how the size of a fine and the recipient of the money can affect the fine’s power to
deter).
150 David A. Root, Attorney Fee-Shifting in America: Comparing, Contrasting, and Combining the "American
Rule" and "English Rule", IND. INT'L & COMP. L. REV. See also Theodore Eisenberg & Geoffrey P.
Miller., The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses
in Publicly-Held Companies’ Contracts, NYU L. ECON. RSCH. PAPER 10-52 (2010).

[p. 41]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 40/53
turn, say, yellow, indicating that a challenge is pending. Perhaps readers could,
simply by clicking the icon, see the pleadings and the status of the dispute. After
a challenge fails, the icon could turn dark green, indicating that the information
has been successfully defended. This would make the information especially
credible. If a challenge succeeds, the icon could turn red. In both of the latter
cases, clicking on the icon could reveal the arbitral panel’s opinion.
The system would track the records of speakers and challengers, and
clicking (or hovering) on the icon could reveal this information. To illustrate,
suppose a person reads a story online. The reader does not recognize the name
of the author or publication, but she sees that the story has a bounty. Hovering
over the icon reveals that the author has bounties on 100 stories, seven have
been challenged, and all seven challenges have failed. This makes the reader
especially confident about the accuracy of the story. Conversely, suppose the
reader sees that the story has a bounty, and the yellow icon indicates that it has
been challenged. Hovering over the icon reveals that the challenger has
challenged 50 different stories and succeeded in 35 cases. This rightly makes the
reader more skeptical of the story.
F. Equilibrium and Use Cases
The system we envision would have broad reach. For digital information,
anyone in the world with internet access and a credit card could attach a truth
bounty to his or her communication. Anyone in the world with internet access
and a little money could challenge such a communication. Although many
details would need to be worked out, arbitration could proceed virtually, with no
need for physical records or travel. This would greatly reduce costs and frictions
growing from competing courts, jurisdictional questions, and legal standards that
vary by state and nation.
If the system succeeded, a virtuous equilibrium would result. People
everywhere would, upon seeing the icon, have greater confidence in the veracity
of the information. They would know that the source of the information had
skin in the game. Not seeing the icon would send a similarly helpful signal.
Information without the bounty would be suspect. Because people could make
money by challenging false or misleading information, relatively few people
would attach bounties to such information, meaning relatively few challenges
and arbitrations would take place, and that would tamp down costs.
The analogy of warranties is important here. Samsung, a large and well
regarded company, voluntarily offers warranties with the sale of every fridge.
The voluntary offer of warranties is a common marketing norm. It is used by
large organizations like Samsung and small ones like the local tailor. Deciding to
offer a warranty involves a financial risk. These firms understand that quite well.
But they also understand the marketing potential of credibility. Truth bounties
make it possible to warrant the truth. Let us now examine a few use cases, in
order to make matters more concrete.

[p. 42]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 41/53
1. Media Publishing
A natural use for truth bounties, and the one we emphasize throughout, is
media publishing. Under the proposed system, the editor of a publication could
choose which stories to support with truth bounties. Staking money would have
several benefits for the editor. Most obviously, a truth bounty elicits trust. Reader
trust is the currency of mainstream journalism—and many newspapers pride
themselves on the quality of their reporting. They advertise their quality, citing
their own reporting standards as a reason to have confidence in their work and,
by extension, to read or watch their communications.151
Truth bounties could also aid in product differentiation. Product
differentiation is helpful in a competitive landscape and of particular importance
for entrants (in this context, new media) who seek to establish themselves. In a
sense, truth bounties are a form of advertising, but unlike general advertising
which suffers from a cheap talk problem, truth bounties send a loud and clear
signal.
It may seem paradoxical for a media company to voluntarily commit to
the payment of money for stories, especially given the tenuous financial status
of many newspapers today and the large volume of stories they run. But on
careful consideration, truth bounties are more realistic than they may appear. In
a sense, newspapers already put money behind many of their stories. There is a
risk that somebody might take offense and bring a defamation lawsuit. While
stories on issues of public import are protected, this protection is limited, as
illustrated by the trial of former vice-presidential candidate Sarah Palin against
the New York Times for an editorial linking her to a mass shooting.152 Even if
the Times was likely to win (it did), the expense of the trial must have been
significant. Had the paper lost, the scope of liability could have been large and,
perhaps worse, highly unpredictable. Truth bounties hedge risks—they stipulate
amounts that are known in advance and can be controlled by the paper itself.
And just like the implied stake demanded by defamation law, no payouts have
to be made if the stories are true.
Finally, consider profits. Many media companies want to earn money.
If the New York Times posted truth bounties, it might convince some skeptics
to trust its reporting. If only a fraction of the millions of Fox News watchers
bought a subscription, the Times could come out ahead. Likewise, if Fox News
wanted to draw viewers and readers away from CNN and MSNBC, it could
151 Efrat Nechushtai & Lior Zalmanson, ‘Stay Informed’, ‘Become an Insider’ or ‘Drive Change’:
Repackaging Newspaper Substriptions in the Digital Age, 22 JOURNALISM 2035 (2021) (finding that,
among the 55 top-circulated daily newspapers, every subscription pitche included information
quality).
152 Jeremy W. Peters, Sarah Palin v. New York Times Spotlights Push to Loosen Libel Law., N.Y. TIMES
(Feb. 15, 2022), https://www.nytimes.com/2022/01/23/business/media/sarah-palin-libel-suitnyt.html.

[p. 43]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 42/53
attach truth bounties to its stories. The ability to signal the quality of one’s
product is valuable, whether that product is a toaster, electric car, or information.
2. Campaign Speech
In January 2015, two Republican presidential candidates got into a heated
debate on national television.153 Rick Perry argued that Mitt Romney had
supported health care mandates and that he was trying to cover up his past
support for these policies.154 “Rick, I’ll tell you what” Romney replied, turning
to face his opponent and extending his hand “Ten Thousand bucks? Ten
thousand dollar bet?” Romney was willing to stake this amount to prove his
point, but he was rebuffed by Perry: “I’m not in the betting business.”155
This short exchange is revealing. It demonstrates, first, how much factual
statements matter for political figures. Whether or not Romney supported
healthcare was important for his candidacy. 156 Second, Perry had no skin in the
game. Because the odds of Romney suing him for defamation and winning were
very low, and because no one else could sue, the accusation was effectively cheap
talk. Perry could just as easily have asserted that Romney was secretly a Democrat
or a citizen of Russia. A more subtle point concerns the social reaction to this
offer. Romney was roundly mocked for his response because “casually offering
a $10,000 bet” was a violation of a social norm—it made Romney appear “rich,
elite, and out of touch.”157
Truth bounties could offer a helpful tool in politics. If such bounties had
been in use, Romney could have staked $10,000 (or more) behind his claim that
he never supported healthcare mandates. To be specific, he could have written
a statement after the debate, posted it online, and attached a truth bounty. To
mitigate the social norms problem, perhaps Romney’s campaign or a political
action committee, rather than Romney himself, could have staked the bounty.
Anyone—not just Rick Perry—could have challenged Romney’s statement.
Romney’s opponents would have relished the chance to disprove his claim and
collect the bounty. Romney would have relished the chance to defend his claim
153 For an exposition of this point, see Hemel & Porat, supra note 22.
154 Amy Gardner & Philip Rucker, Rick Perry Stumbles Badly in Republican Presidential Debate, WASH.
POST (Nov. 10, 2011), https://www.washingtonpost.com/politics/republican-presidentialcandidates-focus-on-economy/2011/11/09/gIQA5Lsp6M_story.html.
155 Mitt Romney’s ‘Out of Touch’ $10,000 Bet, THE WEEK (Jan. 8, 2015)
https://theweek.com/articles/479518/mitt-romneys-touch-10000-bet.
156 See Tom Cohen, Romney Camp Seeks to Clarify Its Health Care Message, CNN POLITICS (July 5,
2012), https://www.cnn.com/2012/07/05/politics/health-care-romney/index.html (asserting
that Romney’s stance on the healthcare mandate during the 2012 election was a key issue due to
the Republican desire to overturn the Affordable Care Act).
157 Mitt Romney’s ‘Out of Touch’ $10,000 Bet, THE WEEK (Jan. 8, 2015)
,https://theweek.com/articles/479518/mitt-romneys-touch-10000-bet. See also Romney’s $10k
Gamble, POLITICO (Dec. 11, 2011) ,https://www.politico.com/story/2011/12/romneys-bet-winshim-opening-on-attacks-070246; Chris Cillizza & Aaron Blake, Mitt Romney’s $10,000 Mistake,
WASH. POST (Dec. 12, 2011), https://www.washingtonpost.com/blogs/the-fix/post/mittromneys-10000-mistake/2011/12/11/gIQA9aEQpO_blog.html.

[p. 44]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 43/53
in a serious setting with professional arbitrators and a factual record. Best of all,
voters would receive a meaningful signal of truthfulness amid the political noise.
Consider also the following example. In December of 1995, the Republican
National Committee was under pressure to show that it supported expansions
to Medicare. The Committee ran an advertisement depicting Chairman Haley
Barbour holding an oversized cashier’s check payable to “YOUR NAME
HERE.”158 The ad, which was followed by the coupon reproduced below,
offered $1 million to anyone who could disprove the Republicans’ assertion that
they passed a balanced budget in 1995 and increased Medicare spending by 50%.
Eighty different individuals tried to claim the prize.159 Representative Gene
Taylor, a Democrat, argued that the budget was not “balanced” as claimed; Mr.
Charles Resor of Wilson, Wyoming, focused on the second part, claiming that
the use of “increases” was fallacious, and the correct language should have been
“would have increased.”160 The RNC responded to all of these claims with a
form letter denying the prize. In the resulting litigation, the RNC argued that the
advertisement was “parody,” and, in the alternative, that the statement was not
disproven.161 The trial court rejected the first argument, finding that it was a
158 USA TODAY (Dec. 13, 1995).
159 Republican Nat’l Comm. v. Taylor, 299 F.3d 887, 889 (D.C. Cir. 2002).
160 Id.
161 Id. at 889-90.

[p. 45]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 44/53
binding offer, but it accepted the second argument and granted summary
judgment.
This story has an important lesson about the utility and practicality of truth
bounties. The fact that politicians found the need to buy credibility by staking
funds is quite telling of an unmet market demand for credibility. At the same
time, it exposes the risk of multiple claimants, with as many as 80 different
claimants conducting investigations and seeking the $1 million. On the other
hand, the case is useful in assuaging practical concerns. The RNC summarily
rejected all claims with a form letter; very few lawsuits were actually filed, and
the few lawsuits filed were dismissed on summary judgment. Only two cases
were appealed, and they were quickly dismissed. Importantly, the first-come,
first-served language presumably solved over-participation and excessive
litigation. The effect of the first-come language emphasizes the importance of a
default rule that only the first in line can claim the bounty (although she is free
to trade some of her rewards with others in exchange for better evidence).
Truth bounties could have many applications in politics. Here are two
other examples. Candidates could attach bounties to their qualifications and
background (“I served in the war, I am a citizen of the United States, I did not
plagiarize my college thesis”). Super PACs and other groups could attach
bounties to their political ads. This might be especially useful to “dark money”
groups, which want people to believe their communications but do not want to
reveal their donors. These uses and many others would not only help speakers,
they would help listeners. Voters would find it easier to sort truth from lies.
3. Advertising
How do you sell mattresses? As many failed businesses have learned,
having a good product is only one part of the battle, sometimes the easier one.
Effective advertising is key. The problem for a mattress manufacturer is that
pretty much every other manufacturer already promises “the best sleeping
experience,” regardless of the quality of their product. Standing out is difficult.
Truth bounties could be used for commercial speech. A mattress
manufacturer could make statements backed by a truth bond. For example, the
manufacturer could claim that its mattress is made in the United States from topquality latex, has been lab tested, or is clinically proven to reduce back pain. In
all cases, the credibility benefits of having a truth bounty should materialize.
A case of desperados and welshers provides a striking illustration. Rudy
Turilli operated a museum dedicated to the notorious desperado Jesse James. A
central attraction of his museum was his theory that James did not die in a
shootout. Instead, he assumed a secret alias and lived in what became Turilli’s
museum until he passed away of old age. Turilli went on air, advertised his
theory, and then offered $10,000 ($70,000 in 2022 USD) to “anyone who could

[p. 46]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 45/53
prove me wrong.” Turilli’s whole career was built around this assertion.162
Unfortunately for him, the widow of James proved him wrong. Turilli refused
to pay, claiming no contract was ever made and, if made, that his allegations were
never properly refuted. The court, however, disagreed with him and ordered the
payment of the bounty.
Other cases show the difficulty of collecting such bounties under existing
law. Consider Kolodziej v. Mason.163 During a television appearance a defense
attorney claimed that his client couldn’t have traveled from his last known
location to the scene of the crime in the relevant timeframe and was therefore
innocent. The lawyer added “I challenge anybody to show me—I’ll pay them a
million dollars if they can do it.”164 An entrepreneurial law student accepted the
challenge, replicating the trip and showing that it was manageable in time. The
lawyer refused to pay, and the parties went to court. The judge ruled that there
was no contract because the lawyer’s statement was indefinite and hyperbolic,
comparable, the judge explained, to stating “I’ll be a monkey’s uncle.”165 The
judge refused to enforce a promise, made by a lawyer on national television, that
contained a price and induced verifiable reliance by the plaintiff.
To be sure, false advertising law, misrepresentation doctrine, and Unfair,
Deceptive, or Abusive Acts or Practices legislation already create some liability
for advertisers, discouraging them from making misrepresentations about their
products and services. But this liability is limited, either due to the high legal
standard, the time and effort required for litigation, or the narrow scope of
people who have standing to sue. By contrast, truth bounties come with a lower
legal standard, and anyone could claim them.
Truth bounties are similar to product warranties. Indeed, the fact that many
manufacturers provide warranties suggests the value and realism of truth
bounties. Truth bounties are a generalization of this tried-and-true contractual
mechanism.
These ideas cast light on the paradoxical nature of the puffery defense.
Under the puffery doctrine, companies cannot be sued for false advertising if
their statements can be interpreted as “mere puffery”—i.e., exaggeration,
hyperbole, and other speech that is judged implausible. This is often interpreted
as a pro-business rule because it shields firms from liability. But the converse is
also true. Strong puffery defenses make all speech less credible, making it
necessary for firms to invest more in advertising to win market share. Many of
these investments are socially wasteful. If truth bounties could replace some of
them, that would be another benefit.
162 James v. Turilli, 473 S.W.2d 757, 761 (Mo. Ct. App. 1972) (“[D]efendant had virtually made a
career out of his contention Jesse W. James was not killed in 1882 but lived many years thereafter
as J. Frank Dalton.”).
163 774 F.3d 736, 740 (11th Cir. 2014).
164 Id. at 739.
165 Id. at 744.

[p. 47]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 46/53
G. Sustaining Truth Bounties
We have explained how truth bounties could combat misinformation by
distinguishing truthful from dishonest speech. By helping people make the
distinction, the bounty system would benefit not only information consumers
but also the many honest information producers who want to separate
themselves from liars, swindlers, and propagandists. Once implemented, a
bounty system would offer many advantages over other reform proposals touted
today. But could it be sustained?
In game theory, it is common to examine systems by first assuming they
work and then asking whether they will stop working once in place (i.e., asking
whether they are an “equilibrium”). This way of thinking about the world is
useful in many ways, one of which is that it highlights that however much effort
is put into implementing policies, they can be undone quickly if they are not selfsustaining.
With this frame of mind, we can appreciate the power of truth bounties in
creating incentives for actors to maintain the system. Consider a world where all
the major newspapers use truth bounties extensively, politicians apply a bounty
to their arguments on the campaign trial, and commercials by large advertisers
usually include a bounty. Now consider a CEO of a news outlet who considers
a money-saving reform: no bounties on any of company’s stories. It is easy to
see why that would be tempting in the short run: no funds will have to be tied
up, no bounties will have to be paid. But in the longer run, such a strategy would
be destructive. Without truth bonds, readers would treat the news outlet with
skepticism. The CEO would see readership and revenues drop.
This is not a mere thought experiment. We mentioned earlier strong
evidence that labeling some stories as false leads readers to adjust their
perceptions of unlabeled stories, considering them more credible.166 The reverse
would happen here. Deviating from a truth-bounty norm would be a clear red
flag to readers that the source lacks credibility. Importantly, surveys of news
consumption show that readers and viewers greatly care about source credibility
when choosing which content to consume. A recent survey showed that 53% of
US respondents said they prefer to pay for news than use free alternatives
because paid news has “better quality.”167
We have explained that, once operational, a truth bounty system could
sustain itself. Making it operational—developing the system in the first
instance—is a separate and important challenge. One might even think it
undermines our ideas. If the system we propose has so many advantages, why
doesn’t it already exist? Here are two hypotheses. The technology necessary for
a global truth bounty system has not been available for long, and the widespread
focus on misinformation and search for solutions is relatively recent.
166 Pennycook et al., supra note 114, at 4944-4957.
167 Understanding Value in Media: Perspectives from Consumers and Industry, WORLD ECONOMIC FORUM
(Apr. 2, 2020), https://www.weforum.org/reports/value-in-media.

[p. 48]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 47/53
IV. BOUNTIES AND THE FREEDOM OF SPEECH
We have described in detail the infrastructure necessary to create a system
of truth bounties. Here we examine truth bounties on a higher level of
abstraction. First, we consider the advantages of using a voluntary, contractbased approach to misinformation rather than a mandatory, tort-based
approach. Second, we consider the relationship between truth bounties and
equity. We do not believe the system would benefit the rich or harm the poor.
Third, we consider the place truth bounties might occupy in contemporary
speech debates and the opportunities they open for thinking about other
alternative reforms.
A. Contracts vs. Torts
In the eyes of many, defamation law and other information regulations have
failed.168 Still, the standard response has been to double down.169 Many reform
proposals promise benefits, but some also have obvious and immediate risks:
chilling reporting on controversial issues, increasing the cost of information
production and hence information consumption, and making the government a
truth arbiter in contentious domains.
Here we consider bounties as an alternative to the proposed expansions of
current law. We do not make the absolute argument that bounties are superior
to regulation, only that on the current margins, bounties are a better solution
than the blunt expansion of defamation and similar laws.
In a world of exploding information sources, individuals cannot hope to
vet all information hurtled at them. Instead, they opt to rely on basic filters and
heuristics, such as only consuming information produced by sources perceived
as reliable: a single news station, sources that tend to agree with one’s pre-existing
views (and thus have shown themselves to be reliable arbiters of truth, as the
individual understands it), and homophilic attributes.170 The danger is that such
proxies can lead to echo chambers and polarization. By comparison, truth
bounties offer a salient and direct signal of reliability. Rather than making the
broad choice of CNN versus Fox News, one could pick and choose from all
sources. The question is not “which station?” but rather “is there a bounty?”.
A truth bounty is a tax on bullshit.171 If the system took root, news without
a bounty would find less demand and become less effective. The incentive to
168 See, e.g., Verstraete, Bambauer & Bambauer, supra note 52, at 3 (“[M]any proposed solutions [to
the problem of fake news] are unable to strike at the root of the problem[.]”).
169 See supra notes Part I.
170 ‘Who Shared It?’: How Americans Decide What News to Trust on Social Media, AMERICAN PRESS
INSTITUTE (Mar. 20, 2017),
https://www.americanpressinstitute.org/publications/reports/survey-research/trust-socialmedia/.
171 This is a paraphrase of Alex Tabarok, who studied bets in public discourse. Alex Tabarrok, A

[p. 49]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 48/53
produce or spread misinformation would fall. To remain relevant, purveyors of
misinformation could post bounties for their stories, but they would lose their
money. Thus, bounties would discourage misinformation in two
complementary ways: it would cost more to produce misinformation, and it
would reach a smaller audience.
We would not expect the same effect from stricter defamation law.
Although defamation law also imposes a tax on falsities, we explained earlier that
it produces a noisy signal.172 Knowing whether defamation law deters the
reporting of false information requires one to know the implied stakes: can or
will the victim sue, how strong is the case, what damages would the publisher
owe, and so on. Truth bounties are more reliable because they are easier to
interpret and claim. The stakes (i.e., the size of the bounties) are known and
advertised in advance; they do not depend on legal details particular to this or
that jurisdiction. Any member of the public could challenge any communication
with a bounty. If the victim of a story lacks evidence, someone else might have
it. Bounties work even when defamation does not apply, as when a story spreads
lies but does not tarnish any reputations.
Defamation law, being a scion of tort law, also has a particular structural
problem. In a nutshell, the deterrent effect of tort liability divorces the public
value of information from the private harm.173 Whether a newspaper should run
a story will be affected by the scope of expected liability—but the scope of
liability will be uncertain and biased to protect the wealthy. Expected liability when
reporting about a random teacher from Oklahoma is lower than the expected
liability of reporting about a socialite like Ghislaine Maxwell, who was found
guilty of child sex trafficking. This might encourage the paper to report on the
teacher. But the social value of reporting will often run in the opposite
direction.174
Beyond the benefits to the general public, bounties also have advantages
for publishers: credibility, predictability, cost, and coverage. Naturally, these
advantages do not extend to all publishers: a scandalous tabloid would probably
fare worse under a system of truth bounties. But for speakers who care about
truth—either for its own sake or as a way of engendering trust—bounties could
be extremely helpful.
One might think that the bounty system would disadvantage victims of
defamation.175 There are two distinct concerns, the magnitude of compensation
Bet is a Tax on Bullshit, MARGINAL REVOLUTION (Nov. 2, 2012, 7:35 AM),
https://marginalrevolution.com/marginalrevolution/2012/11/a-bet-is-a-tax-on-bullshit.html.
172 See discussion in Part 2.
173 Because of this mismatch, newspapers will generally have suboptimal incentives to investigate
and publish stories. See Matthew Gentzkow & Jesse M. Shapiro, Competition and Truth in the Market
for News, 22 J. ECON. PERSP. 133 (2008); David J. Acheson & Ansgar Wohlschlegel, The Economics
of Weaponized Defamation Lawsuits, 47 SW. L. REV. 335, 336 (2018).
174 Indeed, this is why the Supreme Court created the exception for reports on issues of public
concern, but this should be seen as patchwork.
175 The true victims of defamation are all the people who were misled by it, and in the view of one

[p. 50]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 49/53
and its recipient. Under defamation law, the victim can get compensated for the
full scope of her harm. In a bounty system, either the victim or any member of
the public may claim the bounty, which may be smaller (or larger) than the true
harm. These might seem like serious concerns. But we are not advocating for
abolishing the existing system of liability. We are only arguing that it would be
advantageous to pursue truth bounties instead of expansions to the liability
regime. Unless defamation law goes away, which we do not advocate or
anticipate, truth bounties would not cause victims to lose any rights.
Truth bounties offer another benefit to victims. To vindicate their good
names under defamation law, victims must sue.176 To vindicate their good
names with a truth bounty, it is enough that someone brings a challenge. With
many potential challengers drawing on a larger pool of evidence, the probability
of vindication for a victim necessarily increases. Of course, no one could bring
a challenge without a bounty, but this is another virtue of the system. Without
a bounty attached, stories that defame people should garner less attention and
be taken less seriously. The harms to the victim would decrease.
Truth bounties have a final, more structural benefit. Given the First
Amendment, legislators and regulators cannot impose whatever sanctions they
desire on false speech. To the extent bounties are voluntary, they sidestep these
constraints. A writer, publisher, advertiser, scientist, politician or whoever else
could choose to post a bounty, and someone could challenge it, without violating
any constitutional norm.
B. Equity and Access
Truth bounties aim to democratize the search for truth by enabling
individuals to participate equally in the marketplace of ideas. A critical concern
is to ensure equitable access for all individuals. On this score, we believe that
truth bounties can outperform some alternative proposals, while complementing
others. In contrast to defamation law, which imposes unpredictable and possibly
significant financial risks on speakers and litigants,177 and in contrast to reforms
that would vest big platforms with editorial responsibilities that could
disproportionately impact smaller outlets, truth bounties offer a more equitable
approach.
To begin, consider information consumers. The system would aid all such
consumers by helping them sort truths from falsehoods at zero cost. Insofar as
poorer people have less education and fewer alternative tools for filtering out
of us, the subject of defamation has no privileged claim to priority in this sense. See Arbel, supra
note 96. Still, in the analysis here we follow the conventional treatment of the victim.
176 Many commentators argue that vindication is an important goal of defamation law See Randall
P. Bezanson, The Libel Suit in Retrospect: What Plaintiffs Want and What Plaintiffs Get, 74 CAL. L. REV.
189, 792 (1986); Randall P. Bezanson, Libel Law and the Realities of Litigation: Setting the Record Straight,
71 IOWA L. REV. 226, 228 (1985).
177 See supra notes 125-27 and accompanying text.

[p. 51]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 50/53
misinformation, truth bounties would help them the most. We do not perceive
any equity issues on the consumer side.
Now consider information producers. Using the truth bounty system
would require some resources, which of course not everyone has. But it would
require fewer resources than one might think. As discussed, communicators
might be able to choose the size of the bounty. A $100 bounty from a poor
freelancer might mean more than a $1,000 bounty from the Wall Street Journal.
People can tailor the bounties to their resources. Furthermore, communicators
only lose their bounty if their story turns out to be false or misleading. If their
story is accurate, they keep it. Bounties would not operate forever; any particular
bounty might be good for, say, one year. If no challenge succeeds during that
time, the communicator gets the bounty back, possibly with interest. In short,
honest communicators would not need lots of money to spend. They would need
some money to lend.
To prevent frivolity, people challenging a bountied story would have to pay
a fee. Paying such a fee would be challenging for poorer individuals. This
problem is important but not unique to this context. The same issue arises with
victims of accidents or defamation who cannot afford to sue. Some solutions are
available, such as crowdfunding or third-party litigation funding. The latter
option seems especially relevant in this context. The poor person A could
partner with the resourced person B, with B paying the challenge fee, A
disproving the story, and the parties splitting the bounty. Since many of the
bountied stories would have a public interest component, it is possible that poor
challengers could attract support from wealthy benefactors, NGOs, or public
groups.
Truth bounties have another advantage for smaller players. Today many
people segregate themselves into information silos, consuming information only
from sources that they trust such as the Washington Post or Fox News.178 This
not only results in echo chambers; it advantages established publishers over
smaller ones, making entry difficult. Truth bounties would allow entrants
without established reputations to distinguish themselves by warranting the
quality of their reporting. Warranties are a clear, battletested method of signaling
reliability and attracting new clientele.179
We conclude by considering whether truth bounties would advantage
wealthy actors. The main concern, we think, is that truth bounties would benefit
dishonest wealthy actors who pursue strategic goals at the expense of truth. Rich
players could, simply by attaching a bounty to their communication, send a signal
that their communication is credible, even if it is actually false. In this way, a
truth bounty system could magnify the power of lies by making them more
persuasive. This is certainly a concern, but here are three reasons to think it is
178 Linley Sanders, Trust in Media 2022, YouGov (Apr, 5, 2022)
https://today.yougov.com/topics/politics/articles-reports/2022/04/05/trust-media-2022where-americans-get-news-poll.
179 See supra note 21 and accompanying text.

[p. 52]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 51/53
not serious. First, rich actors who post only small bounties may not gain much
credibility. If a billionaire placed a $1,000 bounty on his communication, would
anyone take it seriously? To signal credibility, he might need a much larger
bounty. Of course, a larger bounty means he will lose more when someone
successfully challenges his communication, discouraging him from pursuing this
strategy in the first place. Second, rich, dishonest actors might be willing to lose
thousands or even millions of dollars here and there. We doubt, however, that
many would be willing to lose those sums over and over by supporting one false
communication after another. We would not expect a flood of bountied, false
stories. Third, and most importantly, truth bounties have dynamic reputational
effects. The system would maintain and publicize a record of bounties and
challenges. People encountering a bountied story on the internet could quickly
learn that the author had, for example, bountied 100 other stories, 11 of which
were challenged, with just one challenge succeeding. Think of what this kind of
information would mean for a wealthy, dishonest actor pursuing the strategy
described above. He might bounty a false story to buy credibility, but consumers
would see that he had bountied many other stories, most of which were
challenged and successfully disproven. The actor’s miserable track record would
expose him and neutralize the credibility gains from his bounty.
In sum, no system to address something as complicated as truth will be
fool-proof or offer completely equitable access to justice. But we believe that
truth bounties could do well on these scores, particularly when compared to the
status quo.
C. Hands-On, Hands-Off, and the Invisible Hand
Should society regulate false information? Perhaps the ablest, sharpest
champion of what we might call information laissez-faire is John Stuart Mill, who
argued that “We can never be sure that the opinion we are endeavoring to stifle
is a false opinion; and if we were sure, stifling it would be an evil still.”180 This
idea culminated in the metaphor of the marketplace of ideas, which was
established when Justice Holmes in Abrams v. United States said that “the best test
of truth is the power of the thought to get itself accepted in the competition of
the market.”181 The marketplace metaphor calls for a hands-off approach to
information.
Technology today presents new challenges to the hands-off approach.182
The digital revolution made it cheaper for low-quality information producers to
spread their messages and drown the truth and easier for people to either get
sucked into or comfortably maintain echo chambers around them. It also
180 JOHN STUART MILL, ON LIBERTY31 (1859).
181 Abrams v. United States, 250 U.S. 616, 630 (1919).
182 MINOW, supra note 3. Hasen suggests that recent advances pose a “clear and present danger” to
people’s ability to judge the truth. HASEN, supra note 4, at 24.

[p. 53]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 52/53
undermined the traditional revenue models of high-quality journalism. As
Professor Hasen argues, the problem is that speech is too cheap.183
Hasen and others who have argued along these lines might be right.184
However, this does not point inevitably to regulation as the solution. Neither
does exasperation with the flaws of regulation mean that we need to give up on
any attempt to improve the information environment. Truth bounties offer an
intermediate position between government regulation and laissez-faire. Truth
bounties are autonomy-preserving and voluntary. They would operate through
privately-run institutions. Their significance, then, goes beyond their
effectiveness. They expand our choice set of how to design institutions for a
modern society.
As an institution, truth bounties are respectful of autonomy because, unlike
the one-size-fits-all approach of tort liability, they could allow each speaker to
tailor her own potential exposure to liability. Having a choice of the extent to
which we want to “put ourselves out there,” is an important aspect of our
autonomy, but tort and criminal liability usually neglect this question.
Another appealing institutional feature is the respect for the agency of
audiences, trusting their ability to discount statements that are backed by nothing
more than words. In the bounty system, audiences have standing.185 We
emphasized throughout that audiences are reliably imperfect, but we think it is
important not to pathologize them. The Supreme Court itself takes a rational
view of audiences, making sure not to belittle them, which Lyrissa Lidsky
powerfully defended by noting that:186
[A] State that indulges an irrationality assumption, or even a bounded
rationality assumption, fails to respect the autonomy of its citizens, an
autonomy upon which a self-governing democracy depends.187
Truth bounties are voluntary with speakers choosing their level of
engagement. In practice, however, they might not feel optional. In a world
where truth bounties are common, speakers will feel strong pressure to offer
them. Self-regulation does not necessarily mean light, half-hearted, or sham
regulation. It can be very powerful. Consider the many sellers offering return
policies far more generous than they are legally required to offer, even at
substantial cost to themselves.
Finally, while truth bounties are run by private organizations, they are
backed by state institutions and infrastructure. Arbitration awards are backed by
the enforcement power of the state, and the rules that govern truth bounty
183 HASEN, supra note 4, at 24.
184 See generally HASEN, supra note 4.
185 See, e.g., Norman v. Borison, 418 Md. 630, 17 A.3d 697 (Md. Ct. Spec. App. 2011) (“the
defamation of a company does not create a cause of action for its shareholders or owners”).
186 Lidsky, supra note 19, at 805. See also McConnell v. FEC, 540 U.S. 93, 258 (2003) (Scalia, J.,
concurring in part and dissenting in part).
187 See Lidsky, supra note 188, at 805.

[p. 54]
TRUTH BOUNTIES: A MARKET SOLUTION TO FAKE NEWS 53/53
institutions (the arbitral panels, the company accepting the bounties) are
products of legislatures and possibly other, official lawmaking bodies.
CONCLUSION
Misinformation threatens society. Many observers before us have proposed
reforms meant to address this threat. While many of these proposals are
thoughtful and valuable, many share a common oversight: they fail to take
seriously credibility effects, that is, how they might affect not just speakers but
also listeners. If a primary problem is that people believe the wrong sources, then
we must be attentive to what forms people’s credibility judgments. This is central
to overcoming the key market failures, spillovers and information asymmetries,
at the heart of free speech.
Having skin in the game begets trust. Perhaps more importantly, having
skin in the game begets better information. “BS vendors,” in the lively language
of Nassim Taleb, cannot survive over time if they have to pay out of pocket.188
This is why the Carbolic Smoke Ball company went bankrupt.189
Professor Hasen laments the rise of “cheap” speech, arguing that the
“cheap speech era has threatened American democracy.”190 If this is the
problem, the solution must involve making speech expensive.191 What makes
our approach novel is not this insight. Indeed, it underlies the many proposals
to impose fines, sanctions, and tort liability on false speech. The novelty of our
approach lies in developing a private mechanism for achieving this goal. The
mechanism is new and occupies a position between top-down regulation and
laissez-faire.
Truth bounties offer an autonomy-preserving alternative that can deeply
impact our democracy and institutions. By pledging one’s statements, one can
broadcast confidence broadly and effectively. By allowing every member of the
public to file a claim, truth bounties democratize the search for truth. By
originating in private incentives, truth bounties can cover ground made immune
to regulation by the First Amendment.
Implementing truth bounties is a challenge, but we believe it is feasible
and—critically—self-sustaining. Once established in one domain, the institution
can expand to others, the right kind of virality.
188 Cf. NASSIM NICHOLAS TALEB, SKIN IN THE GAME: HIDDEN ASYMMETRIES IN DAILY LIFE
(2018).
189 A. W. B. Simpson, Quackery and Contract Law: The Case of Carbolic Smoke Ball, 14 J. LEG. STUD.
345, 368-75 (1985); Carlill v. Carbolic Smoke Ball Co., 1 Q.B. 256 (Dec. 7, 1892).
190 HASEN, supra note 4, at 26.
191 Interestingly, Hasen does not take this approach. He advocates regulations ranging from
funding disclosure rules to bans on targeting of election speech. HASEN, supra note 4, at 77-132.