Escalating Interest in Escalating Penalties
Escalating penalties for repeat offenders are a pervasive feature of punishment schemes in a variety of contexts. Economic theory has had a hard time rationalizing this practice, however, because setting the penalty equal to the social cost of an act should achieve optimal deterrence irrespective of the offender’s record. This paper reviews the literature on escalating penalties, and then develops a theory based on uncertainty on the part of enforcers about offenders’ gains from committing socially undesirable acts. The analysis derives the conditions under which escalating penalties are both optimal (cost minimizing) and subgame perfect. JEL Classification: K14, K42 Key words: Criminal punishment, escalating penalties, repeat offenders
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