Plea bargaining with multiple defendants and its deterrence effect

This article analyzes a model of plea bargaining with multiple co-defendants. We characterize equilibrium as separating or pooling, depending on the relative importance of type-I and type-II errors. Effects of plea bargaining on criminal incentives are examined in an extended model. Contrary to the widespread perception of being “soft” on crime by weakening deterrence, we show that plea bargaining unambiguously reduces crime. The benefit of improved informational efficiency more than offsets the crime-incentivizing effect of offering discounted sentences to defendants who plea bargain. Plea bargaining is therefore socially efficient whenever the risk of wrongfully convicting innocent defendants is sufficiently small.