Optimal Sanctions When Individuals are Imperfectly Informed About the Probability of Apprehension
9 Pages Posted: 27 Sep 2001 Last revised: 26 Aug 2010
Date Written: May 1992
This paper considers optimal enforcement when individuals may be imperfectly informed about the probability of apprehension. When individuals are perfectly informed, optimal sanctions are maximal because, as Gary Becker (1968) suggested, society can economize on enforcement resources by reducing the probability of apprehension while increasing sanctions. But when individuals imperfectly observe the probability of apprehension, it may be optimal to apply lower sanctions while expending more enforcement resources.
Suggested Citation: Suggested Citation