First we show that for wealth-constrained agents who may commit an act twice the optimal sanctions are the offender's entire wealth for the first and zero for the second crime. Then we ask the question whether this decreasing sanction scheme is subgame perfect (time consistent), i.e., does a...

Peer interactions play a key role in the criminal sector due to its secrecy and lack of formal institutions. A significant part of criminal peer exposure happens in prison, directly influenced by policymakers. This paper provides a broader understanding of how peer effects shape criminal...