Wednesday, April 20, 2011
Law enforcers often issue warnings as opposed to sanctions, when they detect first time offenders. However, laws concerning the issuing of warnings versus sanctions to first time offenders may not be strictly defined. That is to say, an individual can be issued a warning or a sanction, even though he is committing the offense for the first time. In such cases, one can interpret the law enforcement mechanism as employing a mixed strategy between warnings and sanctions. However, leaving aside a few exceptions, the existing law and economics literature dealing with optimal penalty schemes for repeat offenders suggests that issuing warnings is a sub-optimal practice. Furthermore, the existing literature has not yet dealt with the issue of law enforcers employing mixed strategies between warnings and sanctions. By employing a two-period optimal deterrence model, this paper provides a rationale as to why it may be in-fact optimal to issue warnings to first time offenders. When uninformed individuals are present and the punishment of the innocent 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 innocent individuals; mixed, pure or no-warning strategies can be optimal. Important variables affecting the optimality of warnings include the harm associated with the crime in question, and the proportion of individuals who are uninformed of the law.