Let Markets Help Criminal Defendants

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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7 Responses

  1. Paul Gowder says:

    Nice. But… when in the chronology of a prosecution can the market be expected to be accurate?

    For prominent cases, I’d worry about there being too much noise in the marketplace. For non-prominent cases, the issue would seem to be getting people with information to participate. (And making sure they have the money to meaningfully do so — which would also be an issue with the prominent cases.)

    If I were the prosecutor, I’d get a warrant to monitor the IP addresses of the people going onto the gambling site and subpoena heavy betters as witnesses. :-)

  2. Eh Nonymous says:

    Paul: mostly right. In fact, interesting point about the witnesses.

    But, a prosecutor (like the SEC does) should monitor such pools and go after heavy _winners_. Nothing wrong with betting heavily on your conviction, so that if you go to jail, you win either way.

    No, the problem is if people are making a killing on inside information. 😉

    So do like the SEC does, wait for a suspicious win, then swoop.

  3. Miriam Cherry says:

    Interesting idea. I have an article (forthcoming, soon!) in the Northwestern University Law Review about using information markets to predict Supreme Court decisions.

    For a number of the reasons – that you already raise in your post – I would think the place to start might be with Supreme Court cases, or perhaps certain types of high dollar value civil cases. Less risk of bad PR for the markets, which are still gaining acceptance.

    But there might be other market-based ways for PDs offices to share info. – perhaps through an internal market or through websites – that could work to level out the informational asymmetries.

  4. Dave Hoffman says:

    I agree that liquidity is the big problem, but (1) even thinly traded markets are relatively useful; and (2) the gambling industry has yet to meet demand. Perhaps starting with high profile cases- capital crimes, political bribery investigations-makes sense, although the potential for herd behavior seems significantly higher in such contexts.

    I see no reason to criminalize insider trading in these markets, and lots of reasons not to. And if it turns out that the markets result in more and better witnesses for trial, so much the better.

    I doubt that this will happen, however. Let’s say that a witness exists who is unknown to both sides. Why would they trade? They have no real private information about the likelihood of a finding of guilt by the jury – their information is so private that it can’t affect the outcome – they only know about the actual fact of guilt. Now, they may think that if they saw someone else commit the crime then it is marginally more likely that the defendant has an alibi, in which case they will trade, but this seems to me to be an odd case that doesn’t really suggest much.

    Generally, the folks who will trade are likely to be a mix of semi-insiders (probably lawyers who know the prosecutor and defense attorney) insiders (counsel? court staff? family) and outsiders (folks who read the newspaper, or those looking for ways to make money), with outsiders predominating.

  5. Paul Gowder says:

    Dave: all you said is true enough, but that seems to cast a little doubt on the efficacy of the practice. Outsiders generally won’t have enough information about the facts of a given case (except in highest profile cases) to use whatever superior case-evaluation resources they have. This of course doesn’t apply in the cases you suggest starting with, although I think outsiders would operate best in fact-intensive (thus hard for defense counsel to analyze) cases with extreme publicity of all facts (thus permitting competing analysis).

    Semi-insiders would have personal incentives either to (a) give the information they have freely (to their own friends), and/or (b) withhold information from the market by not participating (to keep information from going to the other side from their friends).

    Insiders are the truly interesting category of market participant. I submit that counsel could never do it because of major conflict of interest problems (imagine defense counsel placing a bet on conviction!).

    On the other hand…

    Would jurors be permitted to trade in the middle of trial?

    That would be very interesting indeed!

    If the system could be massaged to make that permissible… oh, how much fun it would be to try and create something like that.

  6. One could establish a pool of attorneys who practice criminal law and split their time between prosecution and defense. That would get rid of the claim of uneven information.

  7. Lil' Stevie says:

    Isn’t this really a newish look at the Prisoner’s Dilemma?