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Informal Sanctions on Prosecutors and Defendants and the Disposition of Criminal Cases By Andrew F. Daughety and Jennifer F. Reinganum Abstract: We model the strategic interaction between a prosecutor and a defendant when informal sanctions by self-interested outside observers may be imposed on either or both. Non-strategic outside observers rationally use the disposition of the case (plea bargain, case drop, acquittal, or conviction) to impose these sanctions, but also recognize that errors in the legal process (as well as hidden information) means they may misclassify defendants and thereby erroneously impose sanctions on both defendants and prosecutors. There is a unique equilibrium wherein a guilty defendant accepts the prosecutor’s proposed plea offer with positive (but fractional) probability, an innocent defendant rejects the proposed offer, and the prosecutor takes a defendant who rejects the offer to trial. Furthermore, we show that: 1) changes in the level of the formal sanction affect the level of informal sanctions imposed by outsiders on defendants and prosecutors; and 2) increases in the informal sanction rate imposed on prosecutors results in changes in the level of informal sanctions imposed on defendants. The latter case is particularly noteworthy, as (for example) an increase in the rate associated with informally sanctioning prosecutors for convicting the innocent can result in an increase in the level of informal sanctions by third parties on innocent defendants. Tuesday, 30 June 2015 1:00 - 2:00 pm Location 148, av. de la Faïencerie L-1511 Luxembourg Room BRC201 Langue English Registration - Andrew F. Daughety is the Gertrude Conaway Vanderbilt Prof. of Economics and a Prof. of Law (by courtesy). He is a co-editor of the Journal of Law, Economics, and Organization, on the editorial board of The American Law and Economics Review, and is an associate editor of the RAND Journal of Economics. Jennifer F. Reinganum is the E. Bronson Ingram Prof. of Economics and a Prof. of Law (by courtesy). She is a former co-editor of the RAND Journal of Economics and the Journal of Law, Economics and Organization, and a past president of the American Law and Economics Association. Their common research interests include imperfect competition in markets; product quality provision and signaling; settlement and plea negotiation; models of courts and court systems; products liability and safety; privacy; and the market for legal services. Free seminar Registration to [email protected] (please specify full name and institution) Lunch is planned for registered participants Contact [email protected] Tel: +352 46 66 44 6336