Thursday, June 5, 2014
Henrik Lando and Murat C. Mungan (Department of Law, Copenhagen Business School and Florida State University - College of Law) has posted The Effect of Type-1 Error on Deterrence on SSRN. Here is the abstract:
A traditional view in law and economics holds that wrongful convictions (type-1 errors) and false acquittals (type-2 errors) have the same effect on deterrence. We demonstrate that this view is correct only when the choice set of the potential injurer or offender is dichotomous rather than continuous, the sanction is act-based rather than harm-based, the legal error relates to the actor's behavior rather than to the legal standard, and when effects on the activity level can be ignored. Otherwise, type-1 error either increases deterrence or decreases deterrence less than type-2 error. When type-1 error arises due to a mistake of the identity of the actor, we demonstrate, contrary to a recent argument in Garoupa and Rizzolli (2012), that the error has no direct effect on deterrence.