Working Paper: NBER ID: w3739
Authors: A. Mitchell Polinsky; Daniel L. Rubinfeld
Abstract: This paper analyzes optimal fines in a model in which individuals can commit up to two offenses. The fine for the second offense is allowed to differ from the fine for the first offense. There are four natural cases in the model, defined by assumptions about the gains to individuals from committing the offense. In the case fully analyzed it may be optimal to punish repeat offenders more severely than first-time offenders. In another case, it may be optimal to impose less severe penalties on repeat offenders. And in the two remaining cases, the optimal penalty does not change.
Keywords: optimal fines; repeat offenders; deterrence; penalty structure
JEL Codes: K14; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased penalties (K42) | Behavior of individuals with high offense propensities (K42) |
| Type of offense (K42) | Subsequent penalties imposed (K40) |
| Higher offense propensities (K42) | Necessity for higher penalties for optimal deterrence (K42) |
| Optimal punishment for repeat offenders (K42) | More severe than first-time offenders (K40) |
| Expected harm from actions (D81) | Optimal penalty remains unchanged (H21) |
| Optimal penalty for repeat offenders (H21) | Less severe than first-time offenders (K40) |