The Fairness of Sanctions: Some Implications for Optimal Enforcement Policy
Stanford Law School, Olin Law and Economics Working Paper No. 167; and Harvard Law School, Olin Discussion Paper No. 247
18 Pages Posted: 8 Mar 1999
Date Written: September 1998
In this article we incorporate notions of the fairness of sanctions into the standard model of public enforcement. We first determine the optimal sanction when the probability of imposing sanctions is fixed, and we relate this optimal sanction to the sanction that is ideal in terms of fairness alone and to the sanction that is ideal in terms of deterrence alone. We then consider optimal enforcement policy when both the probability and magnitude of sanctions may be varied. The usual solution in this case involves the maximal sanction and a relatively low probability of enforcement if individuals are risk neutral. When the issue of fairness is added to the analysis, however, the usual solution generally is not optimal because a very high sanction will be seen as unfair. A consequence of the fairness-related motive to constrain the sanction to a moderate level is that the optimal probability of imposing sanctions changes, and it may be higher or lower than the optimal probability in the usual case.
Note: A revised version of this working paper is forthcoming in the American Law and Economics Review.
JEL Classification: D74, D79
Suggested Citation: Suggested Citation