Economic Expert Evidence

• Author: John E. Lopatka
• Published date: 01 September 2016
• Date: 01 September 2016
• DOI: http://doi.org/10.1177/0003603X16657230
• Subject Matter: Articles

Article

Economic Expert Evidence:

The Understandable and

the ‘‘Huh?’’

John E. Lopatka*

Abstract

Expert economic evidence has become increasingly important in antitrust cases, largely because the

Supreme Court in embracing certain strains of economic authority has adopted rules that make

economic effects in individual cases decisive. Some economic evidence is accessible to antitrust

decision makers, even if it is cognitively challenging. The danger posed by this kind of evidence, as

Roger Blair has pointed out, is that witnesses will make assertions unsupported by theory. Traditional

litigation devices can adequately address this danger. But economic analysis has become increasingly

technical, and typical antitrust decision makers are incapable of understanding it. When decision

makers confront information they do not understand, they avoid reaching decisions altogether or they

use heuristic processing and peripheral cues, which results in bias and cognitive illusions. Neither

reaction is desirable. Proposals for addressing the hazards of testimony that is not understood,

including the increased use of court-appointed experts, are unsatisfactory. Perhaps some benefit can

be had by encouraging more rigorous appellate review.

Keywords

antitrust, economics, expert, witness, court-appointed

I. Introduction

Roger Blair has contributed to antitrust economics and legal scholarship in myriad substantive areas,

including among many others monopsony,

1

health care,

2

sports,

3

vertical restraints,

4

and remedies.

5

*School of Law, Pennsylvania State University, University Park, PA, USA

Corresponding Author:

John E. Lopatka, School of Law, Pennsylvania State University, University Park, PA 16802, USA.

Email: jel28@psu.edu

1. See,e.g.,ROGER D. BLAIR &JEFFREY L. HARRISON,MONOPSONY IN LAW AND ECONOMICS (2010).

2. See,e.g., Roger D. Blair & Jill B. Herndon, Ph ysician Cooperative Bargai ning Ventures: An Economic A nalysis,71

ANTITRUST L.J. 989 (2004).

3. See,e.g.,R

OGER D. BLAIR,SPORTS ECONOMICS (2011).

4. See,e.g.,R

OGER D. BLAIR &DAVID L. KASERMAN,THE LAW AND ECONOMICS OF VERTICAL INTEGRATION AND CONTROL (1983).

5. See,e.g., Roger D. Blair, Antitrust Penalties: Deterrence and Compensation, 1980 UTAH L. REV. 57.

The Antitrust Bulletin

2016, Vol. 61(3) 434-460

ªThe Author(s) 2016

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DOI: 10.1177/0003603X16657230

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But he has also written in a confounding procedural area that affects antitrust and indeed transcends it:

the use of expert testimony in litigation.

6

Expert testimony is critical in many legal areas, including

products liability, medical malpractice, civil rights, and patents, to name just a few; testimony is

delivered by physicians of various kinds, accountants, mechanical engineers, chemists, and many

others. Antitrust belongs to the club. Anyone familiar with the course of the law over the past forty

years recognizes that expert economic evidence has become increasingly important in antitrust. Sur-

veys of federal judges and lawyers found that econo mists were the most frequently heard expert

witness in civil trials.

7

George Stigler wrote that he had learned two things from participating in

several antitrust cases:

[1.] The number of economists, ranging from Nobel prize winners to graduate students no better known

than the Unknown Soldier, who are employed in antitrust actions is large, running into the many hundreds.

[2.] The rate of compensation for economists in this activity is not in violation of the federal minimum wage

law.

8

Antitrust law demands expert economic analysis, but economic analysis has become increasingly

technical. The economic proficiency of antitrust decision makers has always lagged behind the state of

the science, but the gap is growing. Only the credulous believe that judges and jurors typically

understand and correctly apply economics expert testimony. Indeed, advocates have trouble mastering

their opponents’ expert testimony, turning for help to their own experts, whose testimony and instruc-

tion they have trouble understanding. Hence the conundrum for the administration of antitrust: A body

of law has become increasingly dependent on expertise that has become decreasingly accessible to

nonexperts.

An examination of expert economics evidence in antitrust litigation in a symposium honoring

Roger is doubly appropriate, because a man is not only what he writes, but what he does, and

Roger Blair testifies. He is a highly sought-after expert witness. No one who knows Roger is

surprised by the demand for his services. He is brilliant yet down to earth. His analyses, grounded

in rigorous theory and imbued with common sense, are invariably lucid and orderly. He is

engaging, witty, and relatable. He is authentic. All of these characteristics, one intuits, would

make Roger a desirable witness as well as a valuable consulting expert. A growing literature in

psychology helps explain the intuition.

Expert economic testimony in antitrust can roughly be divided between that which is simple and

that which is complex. These are relative concepts, and virtually no expert economic testimony can be

understood without cognitive effort. But even simple expert testimony can mislead. Expert economists

can overreach, claiming they can prove more than theory supports. Roger has identified overreaching

and criticized it. Though this kind of testimony represents a threat to reasoned decision making, it can

be addressed through conventional litigation devices. Jurors can be enlightened.

The much greater threat lies in complex testimony. Jurors stay in the dark. When jurors as well as

judges lack the capacity to understand technical evidence, they often rely on heuristic processing,

6. See Roger D. Blair & Jill Boylston Herndon, The Implications of Daubert for Economic Evidence in Antitrust Cases,57

WASH.&LEE L. REV. 801 (2000); Roger D. Blair & Jill Boylston Herndon, Inferring Collusion from Economic Evidence,15

ANTITRUST 17 (2001); Roger D. Blair, Lessons from City of Tuscaloosa, 10 ANTITRUST 43 (1996).

7. See Carol Krafka et al., Judge and Attorney Experiences, Practices, and Concerns Regarding Expert Testimony in Federal

Civil Trials,8P

SYCHOL., PUB.POL’Y& L. 309, 320 (2002).

8. GEORGE J. STIGLER,THE ECONOMIST AS PREACHER AND OTHER ESSAYS 46 (1982). Stigler related a third observation: ‘‘It was not

exactly news, but it was impressed upon me that justice does not always prevail, and it is fortunate that Justice does not

always prevail.’’Id.See Michael J. Mandel, Going for the Gold: Economists as Expert Witnesses,13J.E

CON.PERSP. 113, 114

(1999) (‘‘[T]hereis no doubt that the demand for economic expert witnesses represents a new flow of money coming into the

economics profession.’’).

Lopatka 435