Negotiated Enforcement and Credible Deterrence
Posted: 17 Feb 2000
This paper develops a model of law enforcement in which indicted offenders and the prosecutor can negotiate the penalty prior to the completion of the investigation. The analysis focuses on the credibility of the conviction threat: the prosecutor cannot commit to any predetermined level of investigative effort should the negotiation fail.
The settlement stage introduces several novel features of the optimal enforcement policy, including the possibility that maximal sanctions may not be optimal. We show that the screening process associated with the negotiation stage reduces the incentives for the prosecutor to undertake thorough investigations and increases the rate of noncompliance. This effect is weaker when the prosecutor is subject to a budget constraint.
JEL Classification: K42, K41
Suggested Citation: Suggested Citation