IF WE CONFESS OUR SINS. (7th March 2019)

• Record Type: Journal Article
• Authors: Silva, Francisco
• Is Part Of: International economic review. Volume 60:Number 3(2019)
• Page Start: 1389
• Page End: 1412
• Publication Date: 2019-03-07
• Subjects: Economics -- Periodicals; 330.05
• DOI: 10.1111/iere.12390
• Languages: English
• ISSNs: 0020-6598

Abstract

Abstract: I consider a scenario where a social planner suspects that a crime has been committed. There are many suspects and at most one of them is guilty. I characterize the optimal mechanism for the social planner under different assumptions with respect to her commitment power. I find that the optimal mechanism is a "confession inducing mechanism": Before an investigation, each agent can confess to being guilty in exchange for a reduced punishment. I find that these mechanisms do better than the traditional trial mechanism because of information externalities: When an agent credibly confesses his guilt, he reveals everyone else's innocence.