Rehabilitated or Not: An Informational Theory of Parole Decisions

We consider a parole board that learns about inmates' rehabilitation statuses from observing actions in prison. We show why a board would release one inmate, but not otherwise observationally identical inmates with longer sentences: greater parole board discretion makes additional information more valuable. Consequently, increasing sentences can lead to even greater increases in expected time served. We determine how sentence length affects rehabilitation incentives. To encourage effort, sentences cannot be too short, but when inmates are sufficiently impatient, long sentences may also be undesirable. We show how different parole board priors can support multiple equilibria in rehabilitation effort and investigate the effects of discretion restrictions like parole eligibility. The Author 2010. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.