Cost minimizing sequential punishment policies for repeat offenders

Abstract

This article discusses optimal sanctions for repeat offenders. We analysed a multi-period decision problem, where the regulator's main objectives are to block any violations of law and to minimize the costs of crime control. We conclude that, when offenders are identical and wealth constrained, the government is resource constrained, can perfectly observe illicit gains and commits to a certain policy throughout the whole planning horizon, forward-looking solution implies that cost minimizing deterrence is decreasing in the number of offenses. This analysis is relevant in case when imprisonment is not commonly used, only monetary sanctions are allowed and limited liability of offenders plays an important role. The examples are tax evasion, violations of environmental regulations and violations of competition law.

Deterring repeat offenders with escalating penalty schedules: a Bayesian approach

“…Several papers present reasons why the optimal penalty structure would be either constant or decreasing (Polinsky and Rubinfeld 1991;Burnovski and Safra 1994;Baik and Kim 2001;Dana 2001;Emons 2003Emons , 2004Emons , 2007Motchenkova 2006Motchenkova , 2014. These studies highlight the importance of understanding why real-world penalty structures are escalating instead.…”

“…Endres and Rundshagen (2012) use an infinite-period game to show that when the objective is cost minimization, punishment escalation is an optimal penalty scheme. Endres and Rundshagen (2012), Burnovski and Safra (1994) and Motchenkova (2006Motchenkova ( , 2014 are among a very few articles that allow for more than two periods. Mungan (2013) uses a behavioral economics rationale for increasing penalties.…”

Sanctions for repeat offenders: a question of wealth?

“…Given that a first offense can be sanctioned in both periods and a repeat offense only in period two, we can save on notation and write The government commits to a chosen sanction scheme, so and . One reason why the government does not adjust the penalty after convicting the offender might be that it cannot observe in which period the individual is (Motchenkova, ) . Clearly, (1) puts an upper bound on the set of feasible fines for first and repeat offenders…”

“… A typical objective function as denoted in Motchenkova () among many others can be written as max − ( p + hk ), where k is the number of crimes. …”

Penalty Structures and Deterrence in a Two‐stage Model: Experimental Evidence

“…If sanctions are less than total wealth, sanctions can be increased and the probability of apprehension lowered so as to keep deterrence constant. In related theoretical work, Motchenkova (2014) shows that the results of Emons (2003Emons ( , 2004 also hold for more than two periods; however, she does not allow for history-dependent strategies. penalty structures result in higher deterrence than increasing or flat penalty structures.…”