Law and Economics of Plea-Bargaining ∗ Nuno Garoupa + Universidade Nova de Lisboa, FEDEA (Madrid) & CEPR (London) Frank H Stephen ± University of Manchester This Version: July 2006 ABSTRACT Although highly criticized by legal scholars, plea-bargaining is probably the most transplanted instrument of criminal procedure. In contrast to most of the legal literature, Law and Economics is quite optimistic about it. In this paper, we take the view that such optimism is not well founded. Our approach is based on the view of plea-bargaining as part of a nexus of relationships that undermines the efficiency argument. In particular, we find it quite important to assess the defendant’s lawyer’s incentives and the prosecutor’s goals, both of which are rather neglected in Law and Economics. Other aspects we consider are the interests of the victims and judicial scrutiny. Our conclusions temper the usual Law and Economics optimism. Keywords: Plea-Bargaining, Defendant, Prosecution, Judicial Scrutiny ∗ We are grateful to Oren Gazal-Ayal for helpful comments, and to Lydie Ancelot for excellent notes on the French system. Garoupa acknowledges financial support by POCTI/JUR/55752/2004. The usual disclaimer applies. + Professor of Law and Economics, Faculdade de Economia, Universidade Nova de Lisboa, Campus de Campolide, P-1099-032 Lisbon, Portugal; ngaroupa@fe.unl.pt; phone: 351-21-3801650; fax: 351-21- 3870933. ± Professor of Regulation, School of Law, The University of Manchester, Oxford Road, Manchester M13 9PL, UK; frank.stephen@manchester.ac.uk; phone: 44-161-275 3572; fax: 44-161-275 3579.