Working Paper: CEPR ID: DP3667
Authors: Winand Emons
Abstract: First we show that for wealth-constrained agents who may commit an act twice, the optimal sanctions are the offender's entire wealth for the first crime, and zero for the second. Then we ask whether this decreasing sanction scheme is subgame perfect (time consistent), i.e., does a rent-seeking government stick to this sanction scheme after the first crime has occurred? If the benefit and/or the harm from the crime are not too large, this is indeed the case; otherwise, equal sanctions for both crimes are optimal.
Keywords: crime and punishment; repeat offenders; subgame perfection
JEL Codes: D82; K41; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| optimal sanction for the first offense (s1) (K40) | entire wealth of the offender (K42) |
| higher fine for the first offense (R48) | reduces deterrence effect for the second offense (K40) |
| decreasing sanction scheme (K40) | likelihood of committing a second crime (K42) |
| government behavior (H10) | crime rates (K42) |
| if benefits or harms from the crime are significant (K42) | government prefers equal sanctions for both offenses (P37) |
| government sticks to sanction scheme (P33) | maximizes revenue while minimizing social harm (H27) |
| structure of sanctions (F51) | behavior of potential offenders (K42) |
| government's ability to commit to a probability of apprehension (K42) | compliance behavior (K40) |