Optimal Warning Strategies: Punishment Ought Not to Be Inflicted Where the Penal Provision Is Not Properly Conveyed

Document Type

Article

Publication Date

11-2013

Journal Title

Review of Law & Economics

ISSN

1555-5879

DOI

10.1515/rle-2012-0010

Abstract

Law enforcers frequently issue warnings, as opposed to sanctions, when they detect first-time offenders. However, virtually all of the law and economics literature dealing with optimal penalty schemes for repeat offenders suggest that issuing warnings is a sub-optimal practice. Another observed phenomenon is the joint use of warnings and sanctions in law enforcement: person A may receive a sanction, whereas person B is only warned for committing the same offense. This situation can be explained through the use of hybrid warning strategies, a concept not yet formalized in the law enforcement literature, where law enforcers issue warnings to and sanctions to of first-time offenders. This article uses a two-period optimal deterrence model to provide a rationale as to why it may be optimal to issue warnings. When uninformed individuals are present and their punishment is assumed to be costly, there is a trade-off between such costs and reduced levels of deterrence. Depending on the cost structure associated with the punishment of uninformed individuals, warning strategies, including hybrid ones, may be optimal. A secondary contribution of this article is to point out that lack of information concerning laws may lead to optimal escalating punishments for repeat offenders.

First Page

303

Last Page

339

Num Pages

37

Volume Number

9

Issue Number

3

Publisher

De Gruyter

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