The Informational Effect of Choosing a Prison Sentence

Abstract: In this paper, a game theoretical model is developed in order to study the effect of prison sentencing on criminal behaviour. A two-period model is built in which an individual has to decide between being legal or performing a criminal act and in which the police have to decide whether to sentence the individual to prison. The police have complete knowledge about the individual’s inclination towards exhibiting criminal activity, whereas the individual does not and only receives a signal about his trait. The results of the model show that when the regime of the police is exogenous, a less strict regime will always lead to more criminal activity. Moreover, a corner solution is found in which a stricter regime leads to no criminal activity by the smallest margin. When the strictness of the regime is endogenous, the results indicate that a positive correlation between the strictness of the regime and the amount of criminal activity is possible, but only as a result of a change in one of the other parameters.