Plea Bargaining, Economics Of

A plea bargain is a voluntary exchange of concessions in which a defendant waives his right to a full criminal trial in return for the prosecutor's guarantee of a lesser sentence than would be expected after a conviction at trial. In adversarial systems, plea bargaining is made possible by the law's allocation of valuable, tradableassets to both sides. The defendant has a right to accept conviction by pleading guilty and thus to abort a full trial, and the prosecutor has discretion over the precise charges lodged against the defendant, which enables the prosecutor to specify, within statutory limits, the sentence imposed after a conviction, however it is obtained. Advocates argue that plea bargaining is made necessary by the uncertainty and high resource costs of adversarial trial procedures and the pressure of heavy caseloads, which together strongly incline prosecutors and judges to cooperate in maintaining the steady flow of guilty pleas that account for the vast majority of convictions in American jurisdictions. Citing the mutuality of advantage afforded by bargained pleas in Brady v. United States (1970; 397 U.S. 742), the U.S. Supreme Court explicitly endorsed the offer of leniency to a defendant who in turn extended a substantial benefit to the state.

This characterization invites an economic approach to understanding plea bargains and their place in the criminal process based on assumptions of rational behavior on both sides, with defendants seeking to minimize their jeopardy and prosecutors seeking to maximize some measure of success in dealing with large caseloads in the face of budget and time constraints. Two broad lines of analysis have emerged from this common starting point. The first line of analysis, built on the neoclassical foundations of optimization and efficient equilibrium, focuses on the bargaining behavior of prosecutors and defendants and aspires to mathematical precision, either in predicting the actual outcomes of bargaining, or in prescribing a hypothetical and systemically efficient allocation of resources across the entire criminal process. The second line of analysis, drawing on the evolutionary tradition of institutional economics and its focus on the facilitation of individual transactions, considers existing institutions of criminal justice in historical context. It proposes comparative analysis of how cases are resolved in different legal regimes as they struggle to allocate limited prosecutorial and judicial resources across crowded criminal dockets in pursuit of differing conceptions of criminal justice.

The first line began with William Landes in 1971. He showed bargaining to be a rational response to the costs of trials for both prosecutors intent on maximizing the sum of punishments imposed on defendants as a class and for defendants hoping to minimize the expected [Page 1115]costs of punishment to themselves, an approach that was soon extended by others to encompass the dynamics of the bargaining process itself. Gene Grossman and Michael Katz and others extended this narrow focus on the parties to individual bargains, to include the efficiency effects of plea bargains in societies that are concerned with the costs of erroneous outcomes as well as the costs of material resources. This work, similar to most neoclassical law and economics, superimposes the specific principle of systemic efficiency manifested in competitive markets on legal rules and institutions and has produced provocative results. These scholars demonstrated that under certain assumptions the optimal plea bargain acts as an efficient screening device, in that only those who are actually guilty accept the bargain, while innocent defendants choose to go to trial. To this, Jennifer Reinganum added that, in some circumstances, limiting the prosecutor's discretion to individualize punishments for ostensibly similar crimes in favor of more uniform sentence offers can be systemically efficient.

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