Optimum Corporation Criminal Sanctions

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9309871 ARLEN This project will conduct the first economic analysis of the impact of criminal sanctions on corporations' expenditures on crime prevention and detection ("enforcement"). Corporate enforcement costs warrant consideration because a central goal of corporate criminal sanctions is to deter criminal activity by inducing corporations to spend resources on preventing employee crime. The first section of the project will consider the current trend in sentencing reform towards increased criminal fines for corporate offenders, and the validity of the conventional wisdom that higher criminal fines increase corporations' willingness to spend resources to prevent their employees from committing crimes. The project then will determine what magnitude of corporate criminal fine induces corporations to spend the efficient amount of resources on crime prevention and detection under the current regime of strict vicarious corporate liability. This project can be expected to yield important insights because its focus on corporate enforcement expenditures forces recognition, for the first time, of corporations' conflicting incentives. On the one hand, criminal liability increases a corporation's incentives to spend resources on crime detection because these expenditures deter employees from committing crimes; on the other hand, corporations recognize that their enforcement efforts may increase the probability that their agents' crimes will be detected, thereby increasing the probability that the corporation itself will be subject to criminal liability. The Principal Investigator will employ mathematical modelling techniques. ***