State Liability for Wrongful Conviction: Incentive Effects on Crime Levels

Wrongful convictions may increase the level of crime over the ideal case of their absence. The problem of wrongful conviction is most serious in areas where crime is endemic and for certain groups of citizens who are stereotyped. State liability mitigates this problem; compensating the wrongfully convicted induces some individuals not to commit crimes, thereby leading to a lower crime level. However, state liability may distort the behavior of judges if the welfare of judges is inversely related to compensation for wrongful conviction. We address policy implications that minimize such distortions.