Abstract

This paper proposes a modern mechanism design approach to study welfare-maximizing sentencing schemes in criminal justice systems. We provide a framework for reducing a complex judicial process to a single-agent, direct-revelation mechanism focused on the defendant, and identify a commitment assumption that justifies optimizing over this class of mechanisms. We characterize the generically unique optimal mechanisms for two notions of welfare distinguished by their treatment of deterrence. These mechanisms shed new light on features of the criminal justice system in the United States, from the prevalence of extreme, binary verdicts and plea bargains to the use of jury instructions and an adversarial system, all of which emerge as the result of informational, commitment, and incentive arguments.