The imprisoner ’ s dilemma : the political economy of proportionate punishment . D

The most common heuristic used in economics is not coincidentally entitled the 'prisoner's dilemma'. Several classical economists saw in the social phenomena of crime and punishment an obvious demonstration of the principles of economics. Through changes in the criminal justice system society could deter criminals, thus ridding itself of the baneful costs of crime. Adam Smith (1762) explained the most basic choice inherent to all social action. Men are confronted with the perpetual choice to either truck, barter and exchange—or rape, pillage and plunder. The prisoner's dilemma is a modern and formal presentation of Smith's profoundly subtle insight. The game's namesake scenario describes two criminals so attracted by the personal rewards of defection that they forgo the higher social rewards of cooperation. Not only are the inmates in the narrative strategically pitted against one another, but so are all individuals constantly offered the short term rewards of taking to get ahead instead of trading. institutional design attempts to promote mutual exchange while suppressing coercion. If punishments are levied so the short term rewards of crime are not attractive compared to the long term rewards of production and exchange, then individuals will choose the latter. In the prisoner's dilemma of social interaction, the rule of law acts at the meta-level. As my title implies, I intend to treat the imprisoner—the central planner, the government itself—as no different from the traditional agents that economists so often analyze. I entertain the possibility that state authorities are no better informed or incentivized than the ordinary individuals within society, and that are also tempted by the rewards of defection.