ECONOMIC ANALYSIS GROUP DISCUSSION PAPER Criminal Plea Bargaining with Uncertainty: An Empirical Model of Sentencing by Luke Froeb* BAG 88-4 March 14, 1988 ‘The Economic Analysis Group (FAG), formerly the Economic Policy Office, consists of the Economic Litigation and Regulatory Economic Sections of the Antitrust Division. EAG Discussion Papers are the primary vehicle used to disseminate research and comment from both sections. These papers are intended to inform interested individuals and institutions of EAG's research program and to stimulate comment and criticism on economic issues related to antitrust policy. This series of papers is open to a wide range of material including applied theoretical work, empirical research, policy analysis, and reviews of contemporary publications. In addition to the broad scope of material, titles in the EAG Discussion Papers will include both working papers and completed research. 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In making an offer, the prosecutor faces a tradeott between a higher plea offer and a greater likelihood that it will be rejected. All rejected plea offers result in trials so that the prosecutor must try to avoid being caught with too many trials and not enough attorneys. The model implies that smaller plea discounts are offered to defendants that commit more serious crimes and that more of these defendants reject the plea offer. This implication is supported by individual sentencing data. However, there is no evidence that plea discounts are more likely to be rejected in districts with lighter caseloads, also as predicted by the model.The importance and prevalence of plea baraaining to the processing of criminal cases has motivated a number of empirical studies. All of the studies report findings consistent with a model of plea bargaining where trials result when tha prosecutor and defendant cannot agree on a sentence. For example, each could be overly optimistic about the chances of winning at trial ar the defendant could be less risk averse (more prone to "roll the dice") than the prosecutor. In these cases, the smallest plea offer that a Prosecutor would accept is above the largest plea offer that a defendant would auvept.1 The model that follows takes a different view of the cause of trials, Trials result due to uncertainty on the part of the pruseuutu! about the size of a plea otter that a particular defendant would be willing to accept. Occasionally, the prosecutor makes offers thal are rejected because they are too high. Then a trial occurs. Following earlier approaches, the prosecutor is modelled with a caseload large enough and a staff small enough, so that all cases could not be tried in court. Consequently the size of a plea offer serves as a rationing device for trials (the "price" of a trial) that equates the demand for trials to the supply of trials. The demand for trials is determined by the size of the offered pleas and the supply of trials is determined by the size of the prosecutor's staff In making plea offers to a group of defendants, the prosecutor has two concerns: first, to put as many defendants in prison for as long as the law allows; and second, to avoid being caught with too many trials and not enough attorneys. If the prosecutor could observe the highest plea that a defendant would accept (the "reservation" plea), then it would be possible to capture all of the bargaining rents from the defendant by making a take-it-or-leave-it offer just below the reservation plea. In this world all trials would bo “Twish to acknowledge excellent research assistance from Rob French and useful discussions with Michaol Blook, Jon Joyce, Bruce Kobayashi, Preston MvAlee, Bill Rhodes, Steve Salop, Marilyn Simon, Bert Smiley, Rick Warren-Boulton and Greg Werden. In addition to the usual disclaimer, the views expressed in this paper do not necessarily reflect the views of tle U.S. Department of Justice or U.S. Sentencing Commission. 1. Soc for example, Brian Forst and Kallierine Brosi, A Theoretical and Empirical Analysis of the Prosecutor, 6 The Journal of Legal Studies, 488 (1977). William Landes, ‘An Economic Analysis of the Courts, 14 Journal of Law and Economies, 61 (1971). William Rhodes, The Economics of Criminal Courts: A Theoretical and Empirical Investigation, 5 The Journal of Legal Studies, 311 (1976). David Weimer, Plea bargaining and the Decision to go to Trial: the Application of a Rational Choice Model.10 Policy Sciences, 1 (19/8).