Agents may commit a crime twice. The act is inefficient so that the agents are to be deterred. The agents are wealth constrained so that increasing the fine for the first offense means a reduction in the sanction for the second offense and vice versa. The agents may follow history dependent strategies. The government seeks to minimize the probability of apprehension. The optimal sanction scheme is decreasing rather than increasing in the number of offenses. Indeed, the sanction for the first offense equals the entire wealth while the sanction for the second offense is zero.
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Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number
dp0104.
Find related papers by JEL classification: D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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