Behavioral Economics and Plea Bargaining

Numerous documented cognitive biases, including loss aversion, confirmation bias, and overconfidence, seem to work against resolution of criminal cases through plea bargaining, since doing so requires a criminal defendant to accept immediate loss (punishment) and forfeit the possibility of no loss (acquittal) in exchange for a future benefit (reduction of punishment). This chapter considers why plea bargaining is so prevalent in the US criminal justice system, notwithstanding the existence of so much potentially plea-discouraging cognitive bias. The principal explanation is that the criminal justice system is functionally designed to overcome cognitive bias in order to induce defendants to plead guilty. Incorporation of the insights of behavioral economics into plea-bargaining theory provides a more nuanced explanation of the shape of many features of our criminal justice system and casts new light on the factors that drive plea-bargaining outcomes.