Day fines: asymmetric information and the secondary enforcement system

Abstract

AbstractThe most common pecuniary sanction, i.e. fixed-fines, places an emphasis on the severity of the crime. This fine has the problem of being either too high for poorer offenders to pay or too low for the richer offenders to be deterred. Day-fines, on the other hand, systematically account for the financial situation of the offender as well as for the severity of his offense. Consequently, it imposes equivalent burden of punishment on offenders who committed similar crimes, regardless of their wealth. However, a problem of asymmetric information is raised. Accurate financial information is essential for the efficiency of day-fines, yet its collection is costly. Day-fines receive increasing attention from policy-makers around the world. Nonetheless, it is under-researched in the law and economics literature. Therefore, this article is the first to formally analyze the problem of asymmetric information in the context of day-fines and to develop an optimal secondary enforcement system that would incentivize criminals to provide accurate information regarding their wealth.