Abstract We compare two alternative legal presumptions, one more pro-defendant than the other, with the objective of reducing bureaucratic corruption to any target level at minimum social costs, broadly defined to include law enforcement costs, trial costs, and verdict error costs. In the absence of collusion possibilities between law enforcers and offenders, presumption of innocence involves lower social costs for low corruption targets while presumption of guilt has a cost advantage for high corruption targets. Allowing for collusion enlarges the corruption range over which the presumed innocence rule will dominate. However, there are two possible exceptions to this outcome, namely, if the government's law enforcement budget is limited and if the offenders can be penalized only up to a maximum permissible limit. In each of these cases, presumption of guilt may become the cost-effective rule. J. Comp. Econ., December 2001, 29(4), pp. 722–748. Bilkent University, Bilkent 06533, Ankara, Turkey; and Department of Economics and Finance, Birkbeck College, University of London, 7-15 Gresse Street, London W1T 1LL, United Kingdom. © 2001 Elsevier Science Journal of Economic Literature Classification Numbers: D73, D78, K41, K42.