Credible Criminal Enforcement

Economic models of crime and punishment implicitly assume that the government can credibly commit to the fines, sentences, and apprehension rates it has chosen. We study the government’s problem when credibility is an issue. We find that several of the standard predictions of the economic model are altered when commitment is taken into account. Specifically, when only fines are used, commitment results in a lower apprehension rate and hence a higher crime rate. However, when jail is used (with or without fines), apprehension rates and jail terms may be higher or lower compared to the optimal static policy.JEL K14, K42