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         \begin{center}   
\begin{large}   
         {\bf {\it   Mezzanatto} and  the Economics of Self Incrimination} (  
{\it Cardozo Law Review}(May 1998) 19: 1541-1584) \\ 
  \end{large}   
            
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October 18, 1997 \\   
        \bigskip   
      Eric Rasmusen  \\   
        \vspace{ .7in   }
        {\it Abstract}   
     \vspace*{-12pt}  
    \end{center}   
     This paper uses the economic approach to address a recent legal
question involving self incrimination: what is the effect of allowing
a defendant to waive his right to exclude statements he makes during
plea bargaining from evidence at trial if plea bargaining fails?
This was the issue in the 1995 {\it Mezzanatto} Supreme Court
decision.  What is the reason for such waivers, and do they increase
or decrease the amount of plea bargaining?    I suggest that the waivers have 
two functions in  ``cooperation bargaining'' as opposed to ``penalty 
bargaining'':  (a)   increasing the incentive of the defendant to provide the 
full cooperation he promises in return for leniency, and (b)  increasing the 
reliability of the information the defendant provides.
                         \vspace{ 32pt}

 \begin{small}
          \noindent 
    Indiana University School of Business, Rm. 456,   
  1309 E 10th Street,   Bloomington, Indiana, 47405-1701.
Secretary: 812-855-9219. Direct: 812-855-3356.   Fax: 812-855-3354.  Email:
Erasmuse@indiana.edu. Web:  Php.indiana.edu/$\sim$erasmuse.


I would like to thank Richard Friedman for suggesting to me that {\it
Mezzanatto} could benefit from game theory, and John Maxwell, John
Wiley, and participants in the Indiana Business Economics and Public
Policy seminar, the Indiana Law and Econ Lunch Bunch, and the January
1997 AALS meetings for helpful comments. 

   \end{small}   
   
   
%---------------------------------------------------------------
\newpage

\noindent
1.  The Problem and the Law 

\noindent
 1.1 Introduction
 

     Law and economics scholars have long debated the issue of the
efficiency of the common law generally, but they have had
considerable success in discovering efficiency justifications for
many of its rules.  On the efficiency properties of two major areas
of the law, however, law and economics has remained conspicuously
silent: constitutional law and criminal procedure.\footnote{See, however, 
Section 28.3, the very last section of 
Richard Posner, ECONOMIC ANALYSIS OF LAW (4th ed.  1992).    }   These areas of 
law
seem to have little to do with the utilitarian goals of efficiency,
and much to do with notions of fairness that are independent of
deliberate tradeoffs and human happiness.  

The law of self incrimination involves both of these last frontiers
of the economic approach to law: criminal procedure and
constitutional law.  These are the areas of law most often in the
newspapers, and not only the economist, but the average citizen often
finds it hard to understand the reasoning behind their rules and
decisions.  Like the strict 19th century rules of pleading, they seem
a lawyer's playground, insulated from justice and rationality.



\noindent
 1.2. The Facts of  {\it Mezzanatto}   

 The question at issue in this article  is: 
  
 {\it   Should a defendant be able to waive his right to
exclude self-incriminating statements made during plea negotiations
as evidence in his trial?  }
   
 This question reached the Supreme Court in 1995 in {\it
United States v. Mezzanatto}. Narcotics agents arrested Gordon Shuster for
manufacturing the illegal drug methamphetamine. He
immediately agreed to cooperate and phoned Gary
Mezzanatto so the police could arrange to buy drugs. 
Mezzanatto was then arrested.  Two months later,
Mezzanatto and his lawyer asked to meet the prosecutor to
discuss cooperation.  The prosecutor agreed, on
condition that Mezzanatto waive his right to exclude  
statements he might make during plea bargaining   from
being used   to impeach any contradictory testimony he
might give at trial.  Mezzanatto agreed to the waiver, but  
the prosecutor   terminated the  meeting after catching
Mezzanatto in a lie.       Mezzanatto testified voluntarily
at his own trial, and the prosecutor confronted him with
his earlier statements as part of the cross-examination
and called one of the agents who was present as a witness. 
Mezzanatto was found guilty and sentenced to 170 months
in prison, but appealed on the ground that his   waiver was
not valid.  He won in the Ninth Circuit,\footnote{ United Statesv.
Mezzanatto,  998 F.2d 1452 (9th Cir 1993).}  but lost in
the Supreme Court.\footnote{  United States v. Mezzanatto,   513 U.S. 196  
(1995).   }
 

Seven justices concurred in the majority opinion written by Justice
Thomas.  Three of them, Justices Ginsburg, O'Connor, and Breyer, noted in a 
concurring opinion that the only holding necessary to
decide {\it Mezzanatto} was the validity of a   waiver
which allowed the government to use statements made during plea
negotiations to impeach the defendant's  testimony.  By implication, four other 
members of the majority would uphold
broader waivers which allowed the use of such statements in the
case-in-chief.  Justices Souter and Stevens would not allow any
waivers at all. 
 

\noindent
 1.3.  Rule 410 and Rule 11(3)(6)   

 At
issue was the interpretation of a statute, not of the Constitution.
The Fifth Amendment only applies to compelled testimony, not to
voluntary statements.  Even under the Court's {\it Miranda}
ruling,\footnote{ { Miranda v. Arizona}, 384 U.S. 436 (1966).} it
is perfectly legitimate for the state to use the defendant's
statements as evidence if it can be shown that those statements were
made voluntarily and with full knowledge that the law did not require
them.  Congress, however, has passed statutes which exclude
particular kinds of voluntary   statements from use at trial.

         {\it Mezzanatto} turned on the meaning of two rules, almost identical
to each other, from the Federal Rules of Evidence and Federal Rules
of Criminal Procedure.\footnote{ 
 U.S.CS Fed Rules Crim Proc R 11(e)(6) (1996) says
  \begin{quotation}
 \vspace*{-6pt}\begin{small}
 (6) Inadmissibility of pleas, plea discussions, and related
statements. Except as otherwise provided in this paragraph, evidence
of the following is not, in any civil or criminal proceeding,
admissible against the defendant who made the plea or was a
participant in the plea discussions:

   (A) a plea of guilty which was later withdrawn;

   (B) a plea of nolo contendere;

   (C) any statement made in the course of any proceedings
under this rule regarding either of the foregoing pleas; or

   (D) any statement made in the course of plea discussions
with an attorney for the government which do not result in a
plea of guilty or which result in a plea of guilty later
withdrawn.

   However, such a statement is admissible (i) in any proceeding
wherein another statement made in the course of the same plea or plea
discussions has been introduced and the statement ought in fairness
be considered contemporaneously with it, or (ii) in a criminal
proceeding for perjury or false statement if the statement was made
by the defendant under oath, on the record, and in the presence of
counsel.
 \vspace*{-12pt}\end{small}
 \end{quotation}}   %end of footnote here.
     Federal Rule   of Evidence  410 says 
      \begin{quotation}
 \vspace*{-12pt}\begin{small}
 Rule 410.  Inadmissibility of Pleas, Plea Discussions, and Related
Statements

   Except as otherwise provided in this rule, evidence of the
following is not, in any civil or criminal proceeding, admissible
against the defendant who made the plea or was a participant in the
plea discussions: 

                (1) a plea of guilty which was later withdrawn;

   (2) a plea of nolo contendere;

   (3) any statement made in the course of any proceedings under Rule
11 of the Federal Rules of Criminal Procedure or comparable state
procedure regarding either of the foregoing pleas; or

   (4) any statement made in the course of plea discussions with an
attorney for the prosecuting authority which do not result in a plea
of guilty or which result in a plea of guilty later withdrawn.

   However, such a statement is admissible (i) in any proceeding
wherein another statement made in the course of the same plea or plea
discussions has been introduced and the statement ought in fairness
be considered contemporaneously with it, or (ii) in a criminal
proceeding for perjury or false statement if the statement was made
by the defendant under oath, on the record and in the presence of
counsel.\footnote{ 28 U.S.CS Appx Fed Rules of Evid R 410 (1995).  }
    \vspace*{-12pt}
 \end{small}
 \end{quotation}

   The House and the Senate disagreed as to whether Rule  410 
should allow use of plea bargaining statements for
impeachment purposes, with the Justice Department
strongly supporting  such use.  The effective date of Rule
410 was postphoned until  the enactment of  Federal Rule of
Criminal Procedure 11(e)(6)  without the impeachment
exception,  after which Rule 410 was amended to match
it.\footnote{ \label{dahlin} Eric L. Dahlin, Note: Will Plea
Bargaining Survive United States v. Mezzanatto?  74 Or.
L. Rev. 1365, 1367 (1995).  United States v. Mezzanatto,
Brief for Respondent, Gary Mezzanatto (1994)  in text
near note 14.     Courts   upheld Rule 410  against the strained
interpretation that use ``against''  the defendant  only
meant in the case-in-chief,   not   impeachment;  United
States v.  Lawson, 683 F.2d 688 (2nd Cir  1982). }  


    Courts have ruled that   Rule 410  only excludes    use of
the defendant's statements, not derivative
use.\footnote{ United States v. Cusack, 827 F.2d 696
(11th Cir  1987). } The government may use  the
defendant's statements   to uncover other
evidence,\footnote{\label{amar} This interpretation has an
interesting resemblance to the rule of  The King v.
Warickshall,  168 Eng. Rep.  234 (K.B. 1783). In that case,
a woman  accused of theft  made a confession which was ruled
inadmissible because it was induced by government
promises, but  use of her statement to discover physical
evidence was upheld.  The holding was not based on a
statute, but on the supposed unreliability of  testimony
induced by threats or promises relative to physical
evidence.  For further discussion, see Akhil Amar and
Renee Lettow, Fifth Amendment Principles: The
Self-Incrimination Clause, 93  Mich. L. Rev. 857 (1995).
}   or to  focus cross-examination of the
defendant.\footnote{  Sometimes the defendant asks the
government to waive its right to make derivative use of
his statements. Such an agreement was upheld in United
States v. Palumbo, 897 F.2d 245  (7th Cir  1990).     In  United
States v. Rowley, 975 F.2d 1357 (8th Cir 1992),  the
proffer letter said that statements by the defendant
during plea negotiations could not be used against him
except for perjury or false statement prosecutions or to
impeach him.   The government used the information to
focus the subject areas of its cross examination of him,
and the defendant objected. The court, following   United
States v. Havens, 446 U.S. 620, 626 (1980),  ruled that
this was within the purview of impeachment.} 

     If the defendant's  unsworn  statements in plea bargaining  and  sworn 
statements at trial contradict each other, he may be liable to other sanctions.   
Either he lied to the prosecutor, obstructing justice (see 18 U.S.C. 1001 ) or  
he committed perjury at trial  (see 18
U.S.C. 1621).    That there exist sanctions for those offenses, however,  does  
not mean the prosecutor is allowed to point out the discrepancies at 
trial.\footnote{The prosecutor can use them  in the same case, but not the 
trial, to enhance the sentence for obstruction of justice  under     U.S.S.G. 
@3C1.1.     That, in fact, happened to Mr. Mezzanatto, who received an addition 
of  two points (about 35 months) to his sentence.  {\it Mezzanatto} Respondent 
Brief, {\it supra} note \ref{dahlin},   note 25.
@1101(d) (3) of the Federal Rules of Evidence exempts sentencing from 
  the rules of evidence.  Therefore,  United States v.
Ruminer, 786 F.2d 381  (10th Cir  1986) held that
the plea-statement rules do not apply  in    sentencing. As Professor Raeder 
points out elsewhere in this issue of  {\it Cardozo Law Review}, this can be a 
major loophole in Rule 410, since  the  prosecutor can bring an easy-to-prove 
charge and then  obtain the maximal sentence for that charge by  bringing 
evidence of   other offenses into the sentencing hearing--- but he must prove 
the initial charge under the constraints of Rule 410, and  the maximal sentence 
is  limited  by   the Sentencing Guidelines. 
    }

  
\noindent
 1.4.  Waivers of Rule 410 and Rule 11(3)(6)   


      Rule 410 leaves unmentioned whether the defendant can
waive his right to avoid use of plea bargain discussions
as evidence.  Many other kinds of rights are waivable
according to case law,\footnote{See, for example,   { Shutte v. Thompson}, 82 
U.S. 151, 159 (1872) (waiver of
procedural rights upheld) and {  Cohen v. Cowles
Media}, 501 U.S. 663 (1991) (newspaper waiver of a First
Amendment right upheld);   United States v. Wenger 58 F.3d
280, 281 (7th Cir   1995, Easterbrook, J.)  and  United
States v. Schmidt, 47 F.3d 188 (7th Cir 1995)     (waivers of
the right to appeal upheld).}    but Rule 410 makes no
mention of whether it can be waived by the defendant.  It 
became common for prosecutors to ask for waivers in plea
bargaining and for defendants to grant them.\footnote{ \label{hughes} 
A standard form   used by the United States Attorney's
Office for the Eastern District of New York    requires the
potential cooperator to waive any claim that his
statements   ``are inadmissible for cross-examination should
[he] testify.''      As reported in Graham  Hughes, Agreements for Cooperation 
in Criminal Cases, 45 Vand. L. Rev. 1, 41 (1992).  In another circuit,    United 
States v.
Stevens, 935 F.2d 1380, 1396 (3rd  1991) says  ``Plea
agreements, for example, commonly contain a provision
stating that proffer information that is disclosed
during the course of plea negotiations is inadmissible
as substantive evidence of guilt, but is admissible for
purposes of impeachment. The standard plea agreement
provides:

 `No statements made or information provided by [the
defendant] will be used by the government directly
against her, except for the purpose of
cross-examination or impeachment should she be a
witness in any criminal trial or proceeding and offer
testimony materially different from any statements
made or information provided during the proffer. . . .'
'' }  

 

  The issue in  {\it Mezzanatto} was whether the waivers
were valid.    Waivers can be written with varying degrees
of breadth, but they can be divided into three types.
 

The narrowest waiver only allows use of the defendant's
plea bargaining statements to impeach his personal
testimony at trial, the issue in {\it
Mezzanatto}.\footnote{Just to make sure,  the
defendant may also be asked to waive a right that, as just
discussed, he probably does not have--to exclude
evidence derived from his statements.    A standard form  
used by the United States Attorney's Office for the
Eastern District of New York said,      ``Any prosecution
resulting from a breach of this agreement may be premised
upon: (a) any statements made by [the cooperator] to the
Office or to other law enforcement agents; (b) any
testimony given by [him] before any grand jury or other
tribunal, whether before or after the date this
agreement is signed . . .; and (c) any leads derived from such
statements or testimony... the Office may use
information derived directly or indirectly from the
meeting for the purpose of obtaining leads to other
evidence.''   As reported in Hughes (1992), {\it supra}
note \ref{hughes}, at  41, 50. Some of those very words are
also  cited  in  United States v. Liranzo et al., 944 F.2d 73,
77 (2nd Cir  1991).    }  
    

A second, broader waiver would  also allow use of the
defendant's plea bargaining statements to rebut
evidence that the defendant brings up at trial, even if
that evidence was not the defendant's own testimony. 
This was the issue in {\it United States v. Dortch},   where
the Seventh Circuit upheld such a
waiver.\footnote{The waiver read,       ``...no

statements or information provided by your client during the

`off-the-record'  proffer or discussion will be used against

your client in any criminal case during the government's

case in chief. That is, however, the only limitation on the

use the government may make of your client's statements.''   United States v. 
Dortch,  5 F.3d 
1056, 1068 (7th Cir   1993).}   A Mr. Suess was charged with cocaine
trading.  He met with government agents after
initialling a ``proffer letter''    waiver, and admitted
buying cocaine from Tommie Taylor's partnership.  The
plea negotiations were fruitless and Suess went to
trial.  He called Tommie Taylor as a witness, and Taylor
said Suess had never bought cocaine from him.  This
contradicted what Taylor had said during his own plea
negotations and he was impeached with that.  Next,
however, the government introduced evidence of Suess's
plea negotiation statements to rebut Taylor's
testimony.  The Court took the legality of limited
waivers of the kind at issue in {\it Mezzanatto} to be
obvious, but also upheld waivers for rebuttal.\footnote{    The
Seventh Circuit  has also  upheld a Mezzanatto-style 
clause,  in United States v. Goodapple, 958 F.2d 1402 (7th
Cir  1992).}   The   conflict  between the 7th and 9th circuits
was one reason  the Supreme Court  granted cert to  {\it
Mezzanatto}.   

The third type of waiver would allow the
government to use the defendant's statements for any purpose
whatsoever.  An example of this third type of waiver is the following
excerpt from   an agreement under which the  true-life 
organized crime figure  portrayed in the movie {\it Goodfellas}  agreed to 
testify against his associates: 
   \begin{quotation}
 \vspace*{-12pt}\begin{small}
   In addition, in the event that you do not fully comply with all
the other terms of this understanding (immediate full and truthful
disclosure, testimony, etc. ), this agreement will be nullified.
Should this occur, the Government will be free to prosecute you with
regard to any and all violations of the federal criminal law in which
you may have participated, and to use against you any and all
statements made by you and testimony you have given prior and
subsequent to the date of this agreement.\footnote{
 Nicholas Pileggi, WISE GUY     283  (1985).}   
   \vspace*{-12pt}
 \end{small}
 \end{quotation}
   The validity of this third kind of waiver is less clear, and   has not come 
before the U.S. Supreme Court, at least in the opinion of   the three justices 
who concurred separately in {\it Mezzanatto}.\footnote{Oddly enough, there   is, 
in a way,  a  majority for the opinion that  the {\it Mezzanatto} holding  does 
apply to waivers for the case-in-chief.  Four justices refrained from joining 
the concurrence that denied such a holding, and two other justices joined a 
dissent which said that there was no principled difference between impeachment 
and case-in-chief waivers.  I leave this question to the jurisprudes.}   In a 
case such as this one, of course,   the practical effect of the waiver may not 
be great, since if  the government wished to punish the  defendant for lack of 
cooperation,      expulsion from the witness protection program would make his  
possible incarceration   a positive advantage to him   in terms of  life 
expectancy.    



\noindent
 2.  Public Policy Arguments on Each Side

 Scholars have had surprising difficulty in finding justifications for the  5th 
Amendment's privilege against self-incrimination or    the Miranda 
Rule.\footnote{See Paul Cassell,
Miranda's Social Costs: An Empirical Reassessment, 90 Northwestern
University L. Rev. 387 (1996); Paul Cassell, {\it Miranda}'s
Negligible Effect on Law Enforcement: Some Skeptical Observations,
forthcoming, {  Harvard Journal of Law and Public Policy}; David
Dolinko, Is There a Rationale for the Privilege Against
Self-Incrimination?, 33 {  U.C.L.A. Law Review} 1063 (1986).   
Amar \&  Lettow   (1995), {\it supra} note  \ref{amar} at 889. } 
The debate on the  statutory  Rule 410, however,   has stronger arguments on 
both sides.  I will pass over the strictly legal arguments-- for example, 
whether  by analogy if one type of right can be waived, so can a Rule 410 right-
- and limit the discussion here to public policy arguments.  These, in fact, 
link to the legal arguments.  For  all  parties seem to agree
that the intent of Congress was to facilitate plea
bargaining, and if this is the case, and if silence on the
issue of waivers cannot definitely be said to mean  either
that they are permitted or forbidden, then  the issue
comes down to whether  allowing waivers of Rule 410 really
does facilitate plea bargaining.\footnote{The Souter
dissent, however,    does seem to vacillate as to whether
policy considerations are relevant:   ``The case raises
no issue of policy to be settled by the courts, and if the
generally applicable (and generally sound) judicial
policy of respecting waivers of rights and privileges
should conflict with a reading of the Rules as reasonably
construed to accord with the intent of Congress, there is
no doubt that congressional intent should prevail.'' 
United States v. Mezzanatto,   513 U.S. 196, 27  (1995).    But       ``These 
explanations show with
reasonable clarity that Congress probably made two
assumptions when it adopted the Rules: pleas and plea
discussions are to be encouraged, and conditions of
unrestrained candor are the most effective means of
encouragement. ... Whether Congress was right or wrong
that unrestrained candor is necessary to promote a
reasonable number of plea agreements, Congress assumed
that there was such a need and meant to satisfy it by these
Rules.'' United States v. Mezzanatto,   513 U.S. 196, 32  (1995). } 

  

\noindent
2.1 Arguments for Waivers

  The law treats plea bargains, like settlements of civil
suits, according to the principles of contract law,
although   the  judge  need not accept the agreement between
prosecutor and defendant.\footnote{     ``Pre-trial
agreements, such as cooperation agreements and proffer
agreements, are interpreted according to principles of
contract law.''  United States v.  Liranzo, 944 F.2d 73, 77
(2nd Cir  1991), which provides supporting cites.    A
general, practitioner-oriented article on plea
bargains is    Larry D. Thompson \& Phyllis B. Sumner,
Structuring Informal Immunity, 8 Crim. Just. 16   (1993).  
}    There are differences-- the   ability of either side  to
back out until  the defendant actually pleads guilty breaks with the
contract doctrine of offer and
acceptance\footnote{See Mabry v. Johnson, 467 U.S. 504
(1984).  As Professors Scott and Stuntz say, ``... the bargain is ordinarily not 
binding until the

defendant actually pleads guilty.  Thus, if the prosecutor

promises to recommend a ten-year sentence in exchange for a

plea, and the defendant agrees, either the prosecutor or the

defendant may still cancel the deal at any time prior to the

defendant's performance.''  Robert Scott and William Stuntz,  Plea Bargaining 
as

Contract, 101 Yale LJ 1909 (1992).  }-- but  the principle that  mutual 
promisors are
held to their promises  is generally
upheld.\footnote{The government's contention that
separation of powers and prosecutorial discretion 
forbade courts from binding it to its plea bargains was
roundly rejected in  United States v. Pavia, 294 F. Supp.
742 (D.D.C. 1969).    The decision was probably to the
government's advantage, in general. See    United States
v. Palumbo, 897 F.2d 245, 246 (7th Cir  1990):   ``[t]he
system works . . . only if each side keeps its end of the
bargain.''}      


    In deciding whether such waivers are in the public interest,
one must look at their effect in the immediate case, on other cases
in which the defendant might testify, and on the court system as a
whole.  A major concern in both the Ninth Circuit majority opinion
and the dissent was the effect that waivers would have on the amount
of plea bargaining.\footnote{ United Statesv. Mezzanatto,  998 F.2d 1452
(9th Cir 1993). }.  Plea bargaining reduces the risks and costs of defendants,
prosecutors, and courts.  Judge Sneed, writing for the majority,
feared that allowing prosecutors to refuse to negotiate with
defendants who did not sign waivers would have a chilling effect on
plea bargaining, resulting in more trials and extra burdens for the
courts.  Judge Wallace, in dissent, said that there would be no such
chilling effect, because prosecutors would not require waivers if
they hindered successful plea bargaining.  Both sides believed that
the effect of waivers on plea bargaining in general was an important
determinant of whether waivers should be allowed.\footnote{This issue
was present but downplayed in the Supreme Court opinion.  In
particular, the dissent relied heavily on Congressional intent, and
made a point of saying that actual policy effects were irrelevant.} 

 If the plea bargain is a bargain, then  the parties are presumed to be 
competent to  make agreements in their own interest.    A preliminary bargain in 
which  one side makes a concession to start the plea bargaining itself fits 
naturally into this analytic framework. As Justice Thomas wrote, 
    \begin{quotation}
 \vspace*{-6pt}\begin{small}
       A sounder way to encourage settlement is to
permit the interested parties to enter into knowing and
voluntary negotiations without any arbitrary limits on their
bargaining chips. To use the Ninth Circuit's metaphor, if
the prosecutor is interested in `buying' the reliability
assurance that accompanies a waiver agreement, then
precluding waiver can only stifle the market for plea
bargains. A defendant can `maximize` what he has to `sell`
only if he is permitted to offer what the prosecutor is most
interested in buying.\footnote{  United
States v. Mezzanatto,   513 U.S. 196,22  (1995). The  market   metaphor  can be 
traced back to  Frank Easterbrook, Criminal Procedure as a Market
System, 12 J. LEGAL STUD. 289 (1983).   }
 \vspace*{-12pt}\end{small}
 \end{quotation}

 Making negotiations more flexible ought to increase the number of successful 
negotiations, to the benefit of both defendants and the government. As Judge 
Wallace wrote in his 9th Circuit dissent,  
  ``Given the
mutual benefits achieved through plea bargaining, should we
expect the government continually to require waivers if such
requirements significantly reduce the number of plea
agreements reached?''\footnote{ United Statesv. Mezzanatto,  998 F.2d 1452,21 
(9th Cir  1993).}

 These arguments apply  equally to both  the Mezzanatto waiver and to waivers 
for the case-in-chief.  In cases where  the waivers are offered and accepted, 
they facilitate plea bargaining; in cases where they are not used, the 
possibility of waivers does not impede plea bargaining.  

  
\noindent
2.2 Arguments Against  Waivers

  Exactly the same framework is interpreted by  those less
friendly to the workings of markets  to imply that waivers
should not be granted.       They  argue that  allowing waivers
hurts   the market for plea bargains  in two ways, by 
reducing the number of successful plea bargains and by 
unfairly tilting the table towards the government in
those that are successful.  

  Judge Sneed of the 9th Circuit said, 
   \begin{quotation}
 \vspace*{-6pt}\begin{small}
 To allow waiver of these rules would be contrary to all
that Congress intended to achieve. If these rules were
subject to waiver, candid and effective     plea
bargaining could be severely injured. ...
  Allowing a waiver of these rules would contravene and
thwart the policy - efficient case resolution through
plea bargaining - these rules were designed to
effectuate.\footnote{ United Statesv. Mezzanatto,  998 F.2d
1452, 8,9  (9th Cir 1993). }
 \vspace*{-12pt}\end{small}
 \end{quotation}

 Similarly, the Souter dissent says, 
    ``These explanations show with reasonable clarity that
Congress probably made two assumptions when it adopted
the Rules: pleas and plea discussions are to be
encouraged, and conditions of unrestrained candor are
the most effective means    of encouragement.''\footnote{
{\it United States v. Mezzanatto},   513 U.S. 196, 32 
(1995). }  If bargaining becomes too risky,    small-time criminals will be 
afraid to cooperate with prosecutors,   frustrating not one, but two goals: the 
conservation of judicial resources via guilty pleas, and the production of 
evidence against criminals.\footnote{ Dahlin (1995), {\it supra} note 
\ref{dahlin} at  1383.}    Both of these goals are matters of the public 
interest, not just of the defendant's,  so  any one defendant's  willingness  to 
grant a waiver  is not dispositive of  whether  he should be allowed  to grant 
it, unlike  in the case of other, purely personal privileges.\footnote{In  
Brooklyn Savings Bank v.
O'Neil, 324 U.S. 697  (1945), the Supreme Court said that ``a statutory right
conferred on a private party, but affecting the public
interest, may not be waived or released if such waiver or
release contravenes the statutory policy... ''  An example is the   Speedy Trial 
Act of 1994, 18 U.S.C. @ 3161, which  cannot be waived  because  the public 
would lose from a delay in the criminal's imprisonment if he is guilty, even 
though he and the prosecutor might  both find a long delay convenient.    }
 

To continue the market analogy, prosecutors will charge what  ``traffic may 
bear,''  and this is a bad thing.  I will quote a long excerpt from the Souter 
dissent   to allow a full statement of this position: 
  \begin{quotation}
 \vspace*{-6pt}\begin{small}
      The Rules draw no distinction between use of a statement
for impeachment and use in the Government's case in
chief. If objection can be waived for impeachment use, it
can be waived for use as affirmative evidence, and if the
government can effectively demand waiver in theformer
instance, there is no reason to believe it will not do so
just as successfully in the latter. When it does, there is
nothing this Court will legitimately be able to do about
it. The Court is construing a congressional Rule on the
theory that Congress meant to permit its waiver. Once
that point is passed, as it is today, there is no
legitimate limit on admissibility of a defendant's plea
negotiation statements beyond what the Constitution
may independently impose or the traffic may bear. Just
what       the traffic may bear is an open question, but
what cannot be denied is that the majority opinion
sanctions a demand for waiver of such scope that a
defendant who gives it will be unable even to acknowledge
his desire to negotiate a guilty plea without furnishing
admissible evidence against himself then and there. In
such            cases, the possibility of trial if no agreement is
reached will be reduced to fantasy. The only defendant
who will not damage himself by even the most restrained
candor will be the one so desperate that he might as well
walk into court and enter a naked guilty plea. It defies
reason to think that Congress intended to invite such a
result, when it adopted a Rule said to promote candid
discussion in the interest of encouraging
compromise.\footnote{ { United States v.
Mezzanatto},   513 U.S. 196, 37  (Souter dissent, 1995)} 
\vspace*{-12pt}\end{small}
 \end{quotation}

 Justice Souter's  fear is that a second defect of the plea
bargaining  market will  nullify the intent of Congress:
the prosecutor will  have all the bargaining power, and 
will always force a waiver of Rule 410 on the defendant. 
The  Court's  ruling would  therefore  ``render the Rules
largely dead letters.''\footnote{  Ibid at  27.   }   As
Eric Dahlin puts it, ``Because the prosecutor will
almost always have a strong power advantage over the
defendant, a true `bargain'   will not result and most
defendants will end up signing waivers, despite their
desire to not do so.''\footnote{  Dahlin  (1995), {\it supra} note \ref{dahlin} 
at 1381.  }  

And, indeed,    both with respect to the Mezzanatto waiver and to  plea bargains 
generally, it seems that the agreements are unconscionably one-sided.  Consider 
the following  excerpt from a plea bargain in a  different case. 
    \begin{quotation}
 \vspace*{-6pt}\begin{small}
         It is further understood that Mr. Schulz must at all times give
complete, truthful and accurate information and testimony and must
not commit any further crime whatsoever.  Should Mr. Schulz commit
any further crimes or should it be judged by this Office that Mr.
Schulz has given false, incomplete or misleading testimony or
information, or has otherwise violated any provision of this
agreement, this agreement shall be null and void and Mr. Schulz shall
 thereafter be subject to prosecution for any federal criminal
violation of which this Office has knowledge, including, but not
limited to, perjury and obstruction of justice.  Any such
prosecutions may be premised upon any information provided by Mr.
Schulz, and such information may be used against
him.\footnote{United States v. Stirling, 571 F.2d 708, 730
(7th Cir   1978).}
 \vspace*{-12pt}\end{small}
 \end{quotation}

   The agreement  allows one of the two parties to be the judge of whether it 
has been violated, and if  that is so judged,  the judging party is free to  
keep all of its benefits from the bargain and make even fuller use of them.  The 
government can say that Schult gave incomplete testimony regardless of what he 
actually gives, and then use what he said against him. 
 If the market for plea bargains leads to such  one-sided contracts,   how can 
they be allowed? 

  
\noindent
 3.  An Analytic Framework for Plea Bargaining

\noindent
     3.1  Penalty Bargaining and Cooperation
Bargaining

  Before I discuss these arguments  from the vantage point
of an economist and game theorist, it will be useful to 
distinguish between two kinds of plea negotiations:  
``penalty bargaining'' and ``cooperation
bargaining.''\footnote{\label{estrada}   I have used the term ``penalty 
bargaining''  to mean the same thing as the   ``charge
bargaining''  of Mr. Estrada's oral argument before
the Supreme Court.  1994 U.S. TRANS LEXIS 170  at 13.  ``Penalty bargaining''  
more aptly describes bargaining over sentence reduction for a given charge and 
can be translated to the civil suit context more easily. }
Penalty bargaining occurs when the defendant has no
information useful to the government, so each side's
gain from bargaining is purely avoiance of the  risk and
cost  of going to trial.  Cooperation bargaining occurs
when the defendant does have information to trade,   and
the gain from bargaining includes this information,
which could be used in other trials.  Penalty bargaining
leads to an compromise sentence, somewhere between
nonprosecution and  the longest sentence for the  most
heinous conceivable charge.   Cooperation bargaining,
however, can lead to    complete immunity for the
defendant, or even  an improvement in wealth or safety,   
since  both he and the government can still benefit at the
expense of third-party criminals.\footnote{ Myrna Raeder  writes    elsewhere in 
this issue of {\it Cardozo Law Review}   that   the 
  Sentencing Guidelines  revolutionized sentencing practices after 1989 and that  
this invalidates many of the assumptions of the present article.   I think not.   
Both before and after the  Guidelines,  prosecutors had the discretion to agree 
to reduce the charges in exchange for a guilty plea, and  judges had  the 
discretion to  reduce sentences  of prisoners who cooperated with the 
prosecutor.     The legal issues   involved in  enforcement of plea bargains  
remain   the same, and while the Guidelines reduced    flexibility  in  the 
terms of  agreements,  they  by no means eliminated them.  In fact, by  
increasing the predictability of sentences, the Guidelines  may have made plea 
bargaining easier and more attractive-- the  the trial judge's  idiosyncrasies   
matter less.   As Professor Raeder notes,  the Guidelines specifically allow for 
departures based on  the defendant's ``substantial assistance,'' ``acceptance of 
responsibility,'' and  being a minor participant in the crime.   At any rate, 
note that the model   to be used below can be restricted to  bargaining between 
a plea of innocent and  a plea of guilty to a lesser charge  with a penalty 
fixed by law. 

 The two categories of penalty and cooperation bargaining, though perhaps not 
their names, apply to civil suits also, where the  amount of the settlement is 
unimpeded by guidelines.  Most civil settlements  are to avoid the cost of 
trial, like penalty bargaining.  It may also happen, however, that the defendant 
will testify against other defendants in exchange for a  reduction in his own 
liability. 
}    

      The law has  not always recognized either the similarities or the 
differences between the two forms of plea negotiations.  Rule 410 has been 
applied to  immunity discussions,  an easy extension  to plea bargains with null 
sentences. \footnote{ See  United States v.
Boltz, 663 F. Supp. 956 (D. Alaska 1987).   }    Cases in which  a defendant  
discussed  reduction in other defendants' sentences in exchange for his 
cooperation, however,  have been excluded, and although these are    perhaps 
excludable from ``plea bargaining'' as a semantic matter,  clearly  departs from 
the intent of Rule 410.\footnote{ See U.S. v. Robertson,  582 F2d
1356  (5th Cir  1978);   U.S. v. Doe,   655 F2d 920  (9th Cir  1980).  }
   
 The gains from defendant cooperation are a key element 
 because if defendant cooperation is not an important part of
the process, there is no need for the defendant to say anything
during the plea negotiations. If bargaining were simply over the
length of the sentence, the defendant's lawyer, acting as his agent,
could conduct the negotiations, reducing the risk of adverse
disclosure.  It is when the defendant wishes to show what information
he has has available to help the prosecutor in other cases that the
defendant must speak for himself and risk admissions that may hurt
him if the plea bargain fails.  Rule 410 is only important when
defendant cooperation is important. As Mr. Estrada of the  Justice Dept. said  
at oral argument, 
    \begin{quotation}
 \vspace*{-6pt}\begin{small}
  In the first
category, it will be a waste of time for everyone involved
even to meet with the defendant, because charge bargaining,
which is the usual     type of plea bargaining that has
traditionally been known to this Court, really usually only
involves the defense lawyer calling the prosecutor on the
phone and arguing about what his client did and what he
thinks an appropriate sentence or charge might be.  

      And in the first class, the charge bargaining class of
cases, we never ask for a waiver. We never ask to meet with
the client, or hardly ever, because it would be a waste of
their time and ours, and we only do it in cases that involve
cooperation... \footnote{{\it Mezzanatto} oral argument, {\it supra} note 
\ref{estrada} at 13.}
 \vspace*{-12pt}\end{small}
 \end{quotation}


    Mr. Estrada was wise to make this point in his argument because  the 
justices, like most of us, tend to think of penalty bargaining when we hear the 
words ``plea bargaining'', and penalty bargaining is quite different from 
cooperation bargaining.  As one of the Justices said in questioning Mr. 
Mezzanatto's attorney, 
   \begin{quotation}
 \vspace*{-6pt}\begin{small}
...  I'm interested in the same point, because frankly it had
not occurred to me until I heard the Government's argument.
He says, look, plea bargains go on all the time, and they're
not under this procedure. They're not in a context in which
the defendant is present with his counsel making statements
to the United States Attorney.

   That context is reserved for questions when they want the
witness' cooperation both by disclosing information that he
knows so that they can have further investigation, number 1,
and number 2 so that they can use his testimony at trial, so
that the plea bargaining you're talking about is just not
really affected in most cases by this rule.\footnote{Ibid.  at 30.}
   \vspace*{-12pt}\end{small}
 \end{quotation}

 
    If  the  gain from cooperation  is large, there is a
substantial benefit  to both prosecutor and defendant
from reaching an agreement.  The prosecutor gets
information useful in other cases, while the defendant
gets  a reduction in his sentence.  Even if  there is no 
reason to waive Rule 410 in all    plea bargaining,  the gain
from cooperation could   provide a reason to waive Rule 410
in particular cases where the defendant can provide
useful information.  The question remains, however, of
why waiver is necessary for cooperation bargaining to be
effective.    When Rule 410 is waived, does the prosecutor
gain something which the defendant does not lose?      The
next section of this article will address that question. 
  


\bigskip
\noindent
{   3.2  The Model. }

  In  thinking about either penalty bargaining or cooperation bargaining, it 
will be helpful to  use a formal model to clarify the different situations and 
their parameters. 
         Let us assume that the defendant and prosecutor both believe
that the penalty if the case goes to trial will be
$T$.\footnote{Nothing in the present analysis would be significantly
affected if the model were to allow for a probabilistic distribution
of possible penalties, including acquittal, at trial.} Let the legal
costs of going to trial be $C_d$ and $C_p$ for defendant and
prosecutor.\footnote{The defendant will often be represented by a
public defender, in which case $C_d =0$ and $C_p$ includes the legal
costs of both sides, since the government bears the cost of public
defenders. } 
   The expected payoffs are then $T - C_p$ for the prosecutor
and $-T - C_d$ for the defendant if they go to trial.  

 The defendant may have the additional bargaining chip of information
useful in other cases.  Denote the value of this cooperation to the
prosecutor by $Z_p$, and the cost to the defendant by $Z_d$.  The
values $Z_p$ and $Z_d$ are measured in expected years of sentence in
the immediate case; if $Z_p=2$, it means that the prosecutor would
surrender 2 years of sentence in return for cooperation.  


   If the two parties settle for a guilty plea with a penalty of $X$,
the payoffs are $X+ Z_p$ for the prosecutor and $-X-Z_d$ for the
defendant.  The sum of the payoffs equals $X+ Z_p- X-Z_d =(Z_p --
Z_d)$, compared to a sum of $T - C_p -T - C_d= -C_p -C_d$ if the case
goes to trial. The surplus to be split is therefore $C_p + C_d +
Z_p-Z_d$. 
 

 The prosecutor's payoff is
 \begin{equation}\label{e01}
 \pi_p = \left| \begin {array}{ll}  T -C_p  &{\rm at \; trial}\\
 X + Z_p & {\rm with \; a \; bargain}\\    \end{array} \right.
\end{equation}
 The prosecutor will agree to a bargain if 
 \begin{equation}\label{e02}
  X+Z_p \geq T-C_p \\
 X \geq T -C_p-Z_p.
\end{equation}				   
 				   

 The defendant's payoff is
 \begin{equation}\label{e03}
   \pi_d = \left| \begin {array}{ll}  -T -C_d  &{\rm at \; trial}\\
 -X - Z_d & {\rm with \; a \; bargain}\\  \end{array} \right.
\end{equation}				   
 The defendant will agree to a bargain if 
 \begin{equation}\label{e04}
  -X-Z_d \geq -T-C_d \\
 X \leq T +C_d-Z_d.
\end{equation}				   

For a bargain to be agreed to by both sides, it must be that
$\overline{X}$ satisfies both the preceding inequalities, so
   \begin{equation}\label{e05}
    T -C_p-Z_p \leq   X  \leq T +C_d-Z_d.
\end{equation}				   
 

 
 Figure 1 illustrates the possible payoffs of the defendant and
prosecutor.  If the case goes to trial, the payoffs are the ``threat
point'' of $(T - C_p, -T - C_d)$.  If a plea bargain is
reached, the prosecutor's payoff might be as low as $T - C_p$
or as high as $T + C_d + Z_p-Z_d$, which happens if $X =
T + C_d -Z_d$.  The prosecutor's payoff cannot go below the
lower bound because he would refuse the plea bargain, or above the
upper bound because the defendant would refuse it.  Similiarly, the
defendant's payoff after a plea bargain might be as low as $-T
- C_d$ or as high as $-T +C_p + Z_p-Z_d$, which happens if $X
= T - C_p -Z_p$.  


 
 \epsfysize=3in 
 \epsffile{mezz2.eps} 
    \begin{center} {\bf Figure 1:  Bargaining Over the Penalty} \end{center}


 Figure 1
 shows these bounds on the plea bargain payoffs by light horizontal
and vertical lines.  Between the bounds is a continuum of possible
payoffs from intermediate sentences within the bargaining range, 
  the heavy line which is he hypotenuse of the triangle.  




\noindent
 4. Cooperation Bargaining

\noindent
 4.1 The Problem of  Commitment

         For studying cooperation bargaining, let us assume that the plea
bargained penalty is exogenously fixed at $X = \overline{X}$; the
parties must agree to that penalty, or let the trial takes its
course. This is somewhat realistic; the U.S. Sentencing Guidelines do
not give perfect flexibility to prosecutors.  From expression (\ref{e05}), we 
will assume that  $\overline{X}$ takes the moderate level in expression   
(\ref{e6}), since otherwise one party or the other will refuse the bargain. 
    \begin{equation}\label{e06}
    T -C_p-Z_p \leq  \overline{X} \leq T +C_d-Z_d.
\end{equation}				

 Let us also assume that cooperation is necessary for the prosecutor
to be willing to accept the bargain. This means that it is
additionally true that
 \begin{equation}\label{e07}
  \overline{X} T - C_p;      
\end{equation}
 that is,   the plea bargain  sentence is  	so low that the prosecutor would 
prefer to  go to trial except for the value of the cooperation he 
receives.\footnote{If inequality  (\ref{e07}) were false, then  the rest of the 
discussion would be vacuous, since the situation would be one in which the 
motive of penalty bargaining would be sufficient to reach agreement whether or 
not cooperation were possible.}

 The other essential element of a game besides the players  and payoffs is the 
order of the moves.  Consider the following alternatives: 
 

\noindent
GAME 1\\
 1. The prosecutor offers  sentences of  $T$ or $X$ for cooperation.\\
 2. The defendant accepts or not.\\
 3. The prosecutor  chooses a  sentence.\\
4. The defendant testifies or not  for The prosecutor. 

 

\noindent
GAME 2.\\
 1. The prosecutor offers  sentences of $T$  or $X$  for cooperation.\\
 2. The defendant accepts or not.\\
3. The defendant testifies or not  for The prosecutor. \\
 4. The prosecutor  chooses a  sentence.\\ 

   These two games present in stylized form one of the great problems of 
cooperation agreements.   If performance is not simultaneous,  the second party 
to perform  needs an incentive to carry out his end of the bargain.   In Game 1  
the defendant will  refuse to  testify, despite his acceptance,   and in Game 2 
the prosecutor will 
choose the sentence of $T$ rather than $X$.   In either game, one party or the 
other,  anticipating non-performance will refuse to enter into an agreement.   
Thus both parties  lose  the benefit of the bargain  because of non-
enforceability.\footnote{This is  also a problem if waivers are unenforceable, 
since  the prosecutor will be unwilling to make concessions in exchange for the 
waiver if the defendant can costlessly breach by asking the court to invalidate 
the waiver.      ``If, therefore, it appears that the plaintiff in error did 
waive his
rights under the act of Congress...he ought not to be permitted to
raise the objections at all.  If he may, he is allowed to avail
himself of what is substantially a fraud.''
 Shutte v. Thompson, 82 U.S. 151, 159 (1872).}

 

This is the  central problem problem of contract law  generally,  and  a 
function of the state is to enforce contracts by penalizing breach.  As 
discussed earlier,  plea agreements are  largely but not entirely  controlled  
by contract doctrine, so the games are more complicated than has been described.    
In Game 2, if the prosecutor breaches, the   defendant can  require the court to 
hold him to his bargain.  


Game 1, however,  is more of a problem.  The doctrine of double jeopardy makes 
it difficult  for a court to  require the defendant to ``give back'' the 
sentence reduction he obtained by breached promises of cooperation.  Consider   
the timing problems in the case of   {\it Ricketts
v. Adamson}.\footnote{Ricketts
v. Adamson, 483 U.S. 1 (1987). }
 

 Adamson pled guilty to second-degree murder of a newspaper reporter
in return for his cooperation and a specified prison term of some
twenty years.  He did testify against two accomplices, who were
convicted of first-degree murder, and was sentenced, the sentence
having been delayed until after his testimony. The accomplices,
however, had their case reversed by the Arizona Supreme Court and
remanded for retrial, at which point Adamson refused to cooperate
without the further concession of release from custody following the
retrial, and the trial court refused to compel him.


The state's response was to vacate the second-degree murder
conviction, on the grounds that Adamson  had violated the agreement, and to
charge Adamson with first-degree murder. He moved to quash the
information and lost, after which he did offer to testify, but had
his offer refused.\footnote{Adamson v. Superior Court of Arizona, 125
Ariz. 579, 611,  P2d 932 (1980).} He was convicted and sentenced to
death, and the United States Supreme Court upheld the proceedings.

      What this illustrates is how hard it is to pin down a witness, and
the contractual nature of the agreement. The  United States Supreme Court 
opinion is
as much about contract law as constitutional law, and the dissent, in
particular, focusses on contract doctrines such as anticipatory
repudiation.     Contract doctrine  has considerable effectiveness in pinning 
down the prosecutor, so it can solve the problem of Game 2.    Vacating  
convictions and  repeating trials, however,  {\it Adamson}'s solution to the 
problem of Game 1,  is cumbersome, and unavailable if the prosecutor's 
performance takes the common   form of recommending a sentence reduction rather 
than accepting a guilty plea to a lesser charge.  

     What is needed, therefore, is a way to turn a situation that is naturally 
Game 1 into Game 2, so that both parties can anticipate the agreement being 
enforced and so will enter into it.  Since the agreement is enforceable against 
the prosecutor but not the defendant,  some way must be found to allow the 
defendant to perform first. 

          The obvious way, which is  in fact widely used, is to delay
sentencing, if not trial, of the  defendant  until  after he
has given his testimony in other trials.  This is
legal,\footnote{   ``...[T]he great weight of modern
authority, particularly in the federal courts, is that,
in guilty-plea cases, the postponement of plea and
sentence is unobjectionable.''  Hughes (1992), {\it supra} note \ref{hughes},  
at  25.}  or  the government could  even wait
until after sentencing to recommend a sentence
reduction.\footnote{   Rule 35(b), FED. R. CRIM. P.,
provides that  up to  a year after sentencing the court may 
reduce  a sentence on a motion of the government.}   


      Postponement of sentencing, however, has two problems. First, it is 
difficult to know how long to postphone sentencing.  As {\it Adamson} shows,  
just waiting until  the other trial seems to be concluded may not be enough.  
Second,  there remains the problem of the quality of the defendant's 
performance.    The prosecutor can be pinned down to  a quite specific promise--
- a particular charge, or a specific sentence.   The defendant, however, is  
providing ``cooperation'' .   At its most specific, this might just involve  
repeating in court under oath  the story that the defendant  told the prosecutor 
earlier in the negotiations.  More often, however,  the  prosecutor wants  the 
defendant to answer  additional questions,   to  peform creditably under cross 
examination,   and to be available for cooperation in other matters that arise 
during investigations, pre-trial  preparation, sentencing proceedings, appeals, 
and so forth.  Even if the performance were limited to  repeating an earlier 
story, the defendant might effectively breach by  adopting an unbelievable 
demeanor on the stand.  Thus, we are left with the problem of performance 
quality.   
   
    It is helpful to  view the situation as similar to when  a seller wishes to 
guarantee the quality of his product to  a buyer, but is not legally required to  
keep his promises about quality.   Many sellers offer money-back guarantees for 
this reason, even though  a dishonest  consumer could take advantage of such a 
guarantee to   return products after use even when the quality is satisfactory.  
Defendants are  in this position.  

 Indeed,  it is sometimes the case that defendants who are accomplices  are in 
competition  with each other to sell cooperation to the government. This is the 
classic Prisoner's Dilemma of game theory, in which two  accomplices each face a 
choice between confessing and remaining silent.  If they both confess, they both 
receive heavy sentences, while if they both are silent, they both receive light 
sentences.  Each will confess, however, because if one confesses and the other 
does not, the one who confesses will receive the lightest sentence possible.    
Defendants in this situation indeed have weak bargaining power vis a vis the 
government, but that is not a bad thing for society.\footnote{See  chapter 1 of 
my book, Eric Rasmusen, GAMES AND INFORMATION: AN INTRODUCTION TO GAME THEORY 
(2nd Ed., 1994) for further explanation of the Prisoner's Dilemma.   The 
Prisoner's Dilemma is also a metaphor for the free market;  competing sellers 
bid the price of their product down in an effort to attract the consumer, even 
though they could do better if they jointly kept prices high.} 

   This Prisoner' Dilemma  is a standard trick of  prosecutors, and has been for 
hundreds of years.    Even in  eighteenth century England,  it was commonplace 
to set up a  competition among accomplices to a crime  in which  all confessed 
because one would be chosen to be a ``crown witness'' and be given immunity in 
exchange for testifying against the others.  In such a situation,   defendants 
were positively eager to proffer evidence, even without guarantee that   any 
particular one of them would become the crown witness\footnote{ Langbein  
(1983), {\it supra} note \ref{langbein} at 88.    }  Their bargaining power was 
minimal, but this was not a bad result.  Increasing their bargaining power by  
eliminating the practice would be like   forbidding  car sellers to   reduce 
their prices to try to attract business fom each other--- a good deal for the 
sellers, but a bad one for the public. 

    This idea may explain why lack of bargaining power is not something to worry 
about, but it does not help with the basic problem of guaranteeing the quality 
of the information the defendant offers.   Even if he offers full cooperation 
for a mere  two months' reduction in sentence, the prosecutor will turn him down 
unless the defendant can guarantee he will actually carry out his promise. How 
can this be done? 


\bigskip
\noindent
 {\it 4.2       Waivers  As Commitment Devices for the Defendant}
 
 We now return to waivers of Rule 410, which may provide
solutions to the problem of enforcing  otherwise
non-credible promises of  defendant  cooperation.     Let us
also return to the  apparently unconscionable  plea
agreement from {\it Stirling} that   I quoted earlier.   I
suggest that  such agreements are actually one of the
solutions we are seeking.    This resolves the puzzle of    why
plea   agreements so often seem to give enormous
advantages to the prosecutor.    It also explains why waivers of Rule 410 became 
so common in cooperation bargaining: it is because they increased the total 
benefits from the agreements, to the advantage of both buyer and seller of 
cooperation.   Waivers became common in  the plea bargaining marketplace  
because the waiverless cooperation agreement was a product that didn't 
sell.\footnote{   Judge Sneed of the 9th Circuit said, 
``Given the

precision with which these rules are generally phrased,  

    the comparative recentness of their promulgation,

and the relative ease with which they are amended, the

courts can afford to be hesitant in adding an important

feature to an otherwise well-functioning rule.''  United Statesv. Mezzanatto,  
998 F.2d 1452, 11 
(9th Cir 1993).  A market analysis suggests that  since  before enactment of 
Rule 410 in 1975   defendant statements were used for impeachment without 
defendant's bargaining for exclusion, and after 1975 waivers of Rule 410 became 
common, that it was the old rule which was well-functioning.   Congress may have 
given  defendants a right that they did not want to have.   (In analogy, 
consider the position of a  potential  mortgage borrower who is granted   
immunity from foreclosure on his house by Congress. Will he be grateful for  
being made such an unattractive borrower? )   }  

The {\it Stirling} agreement is not unique in its one-sidedness. The  standard 
agreement in use in the Eastern District of New York is quite similar to the one   
in {\it Stirling}: 
            \begin{quotation}
 \vspace*{-6pt}\begin{small}
    If the Office determines that [the cooperator] has
cooperated fully, provided substantial assistance to law enforcement
authorities and otherwise complied with the terms of this agreement,
the Office will file a motion with the sentencing court setting forth
the nature and extent of [his] cooperation. . . .  In this connection
it is understood that the Office's determination of whether [the
cooperator] has cooperated fully and provided substantial assistance,
and the Office's assessment of the value, truthfulness, completeness
and accuracy of the cooperation, shall be binding upon [him].... Should it be 
judged by the Office that [the cooperator] has
failed to cooperate fully, or has intentionally given false,
misleading or incomplete information or testimony . . . [he] shall
thereafter be subject to prosecution for any federal criminal
violation of which the Office has knowledge, including, but not
limited to, perjury and obstruction of justice.\footnote{ Hughes (1992), {\it 
supra} note \ref{hughes},  at    38.}
   \vspace*{-12pt}\end{small}
 \end{quotation}
 

  A plea agreement can  also  condition the amount of recommended punishment
on the value of the information given.  In  {\it United States v. Dailey},  the 
agreement specified that if the defendant ``fully cooperated''
then the Government would recommend a sentence between 10 and 20
years, choosing the length ``depending principally upon the value to
the Government of the defendant's cooperation''.     If the Court found,
upon hearing evidence, that the defendant did not fully cooperate,
the sentence would be 35 years.\footnote{ United States v.  Dailey,
759 F.2d 192, 194 (1st Cir  1985). }
\begin{quotation}
 \vspace*{-6pt}\begin{small}
  The defendant agrees to fully
cooperate, as defined in Paragraph 2. If, at the time of sentencing
on the Maine indictment, the defendant has fully cooperated with the
United States, as defined in Paragraph 2, the Government will
recommend a specific term of imprisonment which does not exceed
twenty (20) years and, depending principally upon the value to the
Government of the defendant's cooperation, the Government, in its
sole discretion, may recommend a sentence of ten (10) years; the
defendant may argue for a sentence less than the Government's
recommendation; in any event, the Court shall impose a sentence no
greater than that recommended by the Government. If, at the time of
sentencing on the Maine indictment, the Government presents evidence
and the Court finds by a preponderance of the evidence that the
defendant has not fully cooperated,
  as defined in Paragraph 2, then the court shall sentence the
defendant to a term of imprisonment of thirty-five (35) years. The
Court shall not sentence the defendant to pay a fine on either the
Maine or Oregon indictment. 
\vspace*{-12pt}\end{small}
 \end{quotation}
  The Government's recommendation if
there was full cooperation  was  ``in its sole
discretion.'' Thus, this agreement allows the Court to decide part of
the contractual provisions-- whether there was full cooperation-- but
one party to the contract can decide another-- how valuable the
cooperation was.\footnote{ The issue in the appellate case was
whether conditioning the sentence recommendation on the value of the
information unduly encouraged perjury. The Court ruled that it did
not. }
 
  
 
These  agreements  seem  one-sided.They are, in fact, one-sided. But that
might be to the benefit of both parties. The prosecutor's office has
a reputation to maintain; the defendant does not.   The theory of repeated games 
suggests that the prosecutor can be trusted to keep his promises, but the 
defendant cannot.  Let me try to explain. 

   

 Consider first the situation of two people trying to make an
agreement.  Doe has a reputation to maintain, and would suffer
greatly in his future dealings if he ever broke an agreement .  Roe
is involved in this kind of negotiation only this one time, and has
no need to maintain a reputation.  Suppose the agreement cannot be
enforced in court.  Doe and Roe would lose the benefit of the
bargain, because Doe will not agree to something he knows Roe can
violate with impunity.

One solution is for Roe to voluntarily put himself at Doe's mercy.
If Roe gives a large sum of money to Doe as a hostage for good
behavior, and part of the agreement is that Doe will return the money
if Roe keeps his side of the bargain, then Doe becomes willing to
enter into the agreement.  Roe also benefits, because he knows that
Doe will keep his word and return the hostage money in order to
preserve his reputation for fair dealing.  Roe would like best to
enter the original agreement and break it, but since Doe will not
agree to that, he is happy to settle for adding a hostage clause and
keeping his part of the agreement.\footnote{The same argument applies
if it is known that Doe is an honest man who keeps his agreements for
moral reasons rather than for reasons of reputation, or if Doe is
vulnerable to court judgements and Roe is not. }

 Let us now relate this to criminal prosecutions.  The prosecutor is
in the position of Doe, and the defendant in that of Roe. The
prosecutor's office has a reputation to maintain, and can be better
trusted to keep its agreement even if it could benefit in an
individual case by a violation.  The defendant is more concerned
about the immediate case, and also is given the right by law to
change his mind about his plea.  Thus, the defendant, though eager to
obtain a plea agreement, may not be able to credibly promise
cooperation.  For cooperation, with its benefit $Z_p$ to the
prosecutor, to be added to the bargaining surplus requires some way
for the defendant to be punished if he fails to keep his end of the
bargain.  Waiver of Rule 410 is such a way, equivalent to the hostage
money in the Doe-Roe example.  Having waived Rule 410, the defendant
will keep to the bargain, out of fear that the prosecutor will use
his statements against him in some future trial-- if not the offense
to which he pleads guilty, to a different offense.  The defendant
desires this, because he wants the prosecutor to believe that he, the
defendant, has a strong incentive to cooperate.  
  
 The vagueness of so many plea agreements may be another sign of
reputational asymmetry.  Plea agreements commonly  state that the
prosecution will recommend appropriate leniency to the judge, without
specifying precisely what will be recommended.  The prosecutor can be
trusted, because if he breaks an agreement in one plea bargain, he
will face the distrust of future defendants.  Thus, the agreement
puts the advantage in the hands of the prosecutor.
 
 
   This is entirely dependent  on the prosecutor's desire to maintain his 
office's reputation for carrying out its agreements in order to  be able to make 
agreements with future defendants, or  on his  integrity and honesty in keeping 
agreements even when  courts would not be able to hold him to them.  


  This is entirely dependent  on the prosecutor's desire to
maintain his office's reputation for carrying out its
agreements in order to  be able to make agreements with
future defendants, or  on his  integrity and honesty in
keeping agreements even when  courts would not be able to
hold him to them.   That the prosecutor has a reputation to
maintain is particularly important because it is not
enough for him to contract regarding the  formal charge.  
Evidentiary rules  for sentencing hearings are much
looser than for trials, and   the judge can take into
consideration  conduct by the defendant  which did not
result in an indictment, or even conduct which led to an
acquittal.\footnote{A standard cite is    Williams v. New
York, 337 U.S. 241 (1949), in which  a state judge 
overruled  a jury suggestion for leniency and  sentenced a
murderer  to death  based   on  criminal and moral   offenses
for which he was not tried.   Justice Black, with the
concurrence of  the entire Supreme Court except for
Justices Rutledge and Murphy,  wrote that this was 
entirely in accord with  judges'  ``age-old practice of
seeking information from out-of-court sources to guide
their judgement''  (at 250).   The Court has continued to 
uphold this practice, including recently in   BMW v. Gore, 
116 S. Ct. 1589 (1996) at note 19 and  
United States v.
Watts,   117 S. Ct. 633 (1997). In {\it  United States v.
Watts},  the  9th Circuit, contrary to {\it Williams} and
to  every other circuit, had held that a   judge sentencing
for one offense  could not rely on facts concerning  a
different offense  for which the defendant had been
acquitted.     The Supreme Court reversed per curiam, with
Justice Kennedy dissenting from the  denial of oral
argument.}    

Despite the economist's cynicism, it is not implausible to suppose that 
prosecutors are more likely than criminal defendants to  keep  their word  from 
motives of conscience, but  regardless of that,
they do represent  permanent offices with reputations to
maintain, and hence  may have little temptation to  cheat
in  present  cases if that would jeopardize future ones.   
Even if prosecutors were not required by courts to keep
their bargains, we would expect them to keep them in all
but exceptional cases.\footnote{ \label{langbein}  Professor Langbein
quotes   crown agent Henry Fielding (better known for  
novels such as {\it Tom Jones} )  as saying in  1751  about the
immunity of  the crown witness   that ``[I]t  is true, he hath
no positive Title [no entitlement to nonprosecution]..
. But the Practice is as I mention, and I do not  remember any
Instance to the contrary.''   John Langbein, Shaping the
Eighteenth..., 50 U. CHI. L. REV 1, 92  (1983). }


     

 
In this way, we have an explanation for the usefulness of the Rule
410 waiver to both sides, and of why it is necessary  to the creation of  the 
cooperation 
value $Z_p$.  When Rule 410 is in place, the defendant will promise to
cooperate later, but then back out, so that cooperation never does
occur, and nobody obtains  $Z_p$ even if a plea bargain has
been reached.  When Rule 410 is waived, the defendant obtains a lower
sentence in return for cooperation, and the prosecutor knows that the
defendant will cooperate out of fear that his statements made earlier
will be used against him.  




\bigskip 
\noindent
 { 4.3   Waivers as Incentives for Truthfulness}


       A different explanation for Rule 410 waivers is  also   based on the 
quality of cooperation, but      focusses on  whether the defendant will be a 
satisfactory witness even if he does testify.  Again, the
underlying idea is that the purpose of the waiver is not to affect
the current case, but to elicit truthful information from the
defendant that the prosecutor can use in a separate
case.   This explanation  will be  better at explaining the
Mezzanatto waver  {\it per se}, as opposed to waivers for the case-in-chief or 
plea agreements that give great discretion to the government side.  


   A common part of plea bargaining is the defendant's offer to
incriminate his accomplices. One difficulty is enforcing the
defendant's cooperation once an agreement is reached. Another problem, however,  
is whether the defendant will make a credible witness.  If the
defendant lies to the prosecutor, and the defense attorney in the
other case detects the lie during the discovery process for that
case, the defendant's credibility as a witness is damaged. The
prosecutor will be interested in making a deal with the defendant
only if he thinks the defendant will tell the truth, and tell the
truth completely enough to be a credible witness.  


 Credibility is a special problem when the testimony is
part of a plea bargain.   Ordinarily, a party may not
bolster the credibility of his witness until that
credibility has been attacked by the other
side.\footnote{Federal Rule of Evidence 608(a)(2).}
It has been ruled, however,  that the Government may
introduce plea agreements in direct examination in
order to avoid the jury drawing the inference that it was
trying to hide a source of witness bias. 
\footnote{United States v. Edwards,  631 F.2d 1049, 1052
(2nd Cir 1980). ``Admission of this evidence is
permitted in order to avoid an inference by the jury that
the Government is attempting to keep from the jury the
witness' possible bias.''    At least seven other circuits
are even more willing to allow introduction of plea
agreements, as explained in United States v. Spriggs,
996 F.2d 320, 324 (D.C. Cir 1993). }  

    The prosecutor wants to be able show  a good side of the  witness's 
incentives to the jury.   Judge Trott suggests that if the prosecutor can point 
to a plea agreement that is void if the defendant is caught lying, that can  
(quite rationally) increase the jury's estimate of  his veracity. 
      \begin{quotation}
 \vspace*{-6pt}\begin{small}
 One aspect of the witness that you can emphasize is his
motive to tell the truth. Point out that he can only have a
motive to tell the truth because that is what will get him
what he wants. Lies will only destroy the deal and cause him
to be prosecuted for perjury:
 He wants to stay out of jail. All he has to do to stay out is tell
the truth, not lie. Lies will put him right where he doesn't want to
be, in prison. His motive based on the evidence and the record can
only be to tell the truth!\footnote{\label{trott} Stephen S. Trott, Words of
Warning for Prosecutors Using Criminals as Witnesses,47 Hastings L.J.
1381, 1429 (1996). }
  \vspace*{-12pt}\end{small}
 \end{quotation}

 This is essential, because a  witness who lacks credibility is worse than no 
witness. 
 ``What happened in this case is that their worst
witnesses spilled over and poisoned the better witnesses. We were
able to create not just reasonable doubt but to prove perjury. And
when you prove perjury about witnesses A, B, and C, then the jury
automatically distrusts witnesses D, E, and F.''\footnote{Ibid  at  1389  
(Citing Jim DeFede, The Impossible Victory, Miami New Times,
Feb. 29, 1996, at 1). }

   It is dangerous to  use  any unreliable witness, but  accomplices are the 
worst, because (a) they  have a special temptation to lie to  obtain leniency, 
(b) they are criminal, and hence both lack credibility and, in fact, do lack the 
habit of truthfulness, and (c) the defendant knows them better than the 
prosecutor does, and can seize upon their weaknesses.  As Judge  Trott says, 
   \begin{quotation}
 \vspace*{-6pt}\begin{small}
   The defendant knows more about the informer than you do!  This
advantage may enable the defendant to mount an attack on cross
examination, etc., based on facts or circumstances of which you are
unaware and about which the informer has not told you. To avoid being
caught unprepared, ask the informer what the defendant might bring up
to discredit him or his testimony. Take your time on this because
you're now probing for information that the informer may not want to
tell you.\footnote{Ibid  at  1404. }
    \vspace*{-12pt}\end{small}
 \end{quotation}


  It is often difficult for  criminals to tell the truth.  It is only human 
nature to want to make oneself look better, and any defendant has a need to 
improve his image, or he would not be a defendant.  Even if his testimony is 
immunized, vanity is likely to lead to  inaccuracy.   Yet again, let me quote 
Judge Trott: 
    \begin{quotation}
 \vspace*{-6pt}\begin{small}
 Impress the requirements of absolute honesty and full disclosure on
the witness' attorney and ask the attorney to have a private
discussion with the witness to try to pound this into the witness'
skull. These witnesses invariably hold back information that makes
themselves ``look bad.`` It is devastating in front of a jury to find
out that the first thing such a witness did was lie to the prosecutor
or the case agent!... 
 
 

         Mistrust everything he says. Be actively suspicious. Look for
corroboration on everything you can; follow up all indications that
he may be fudging. Secure information on the witness' background:
mental problems, probation reports, prior police reports. Contact
prior prosecutors who have either prosecuted the witness or used him
in court and read the sentencing memoranda from previous cases. What
do the prosecutors think about his credibility?  How did the jurors
react to him? Was he a helpful witness or was he more trouble than he
was worth?\footnote{Ibid at   1403, 1406. }
  \vspace*{-12pt}\end{small}
 \end{quotation}

        Even if cooperation simply takes the form of providing information to be 
used in investigations, its accuracy is important, since it may be used by 
undercover agents  whose lives may be threatened if they  rely on inaccurate 
information.   Commonly, however,  cooperation takes the form of testimony in 
other trials, in which case the credibility of the defendant in front of a jury 
is crucial.   Having good information is then not enough; the defendant must 
also   be safe against impeachment in cross examination, something difficult 
even for  truthful witnesses in the face of skilled attorneys.  


  One difficulty is whether the   potential witness  has  an unsavory background 
which could be used to impeach him. It is worth noting that although a 
Mezzanatto waiver of Rule 410 for purposes of impeachment is worthless if the 
defendant would not testify on his own behalf anyway, it has bite precisely when 
the defendant would make a good government witness--- because it is only if his 
background and demeanor are credible enough to be useful to the government that 
his testimony would also be useful to himself.\footnote{The Chicago Jury

Study found that in the 1950's,   91\% of defendants without prior criminal

records  and 74\%   of those with prior records  chose to

testify.   H. Kalven   \& H. Zeisel, THE AMERICAN JURY 146 (1966).  Gary 
Mezzanatto, with a wife and three children,  Vietnam special combat awards, and   
no criminal record,  had all the credentials for a good witness either for 
himself or the government.  {\it Mezzanatto} Respondent Brief, {\it supra} note 
\ref{dahlin},  in text near  note 1. }
      But  that credibility is  hard to determine before the cross examination 
itself.  
      \begin{quotation}
 \vspace*{-6pt}\begin{small}
   A prosecutor often may be unable to judge the value of the
defendant's information to other investigations, or the value of his
testimony in other trials, without extensively questioning the
defendant as part of  ``plea discussions`` under Rules 11(e)(6) and 410.
But the prosecutor may justifiably be unwilling to use the facts
proffered by the defendant as the basis for charging or convicting
other persons if the defendant wishes to retain the ability to change
his story under oath when his own liberty is at stake.  It is
reasonable for a prosecutor to conclude that a defendant who is
willing to cooperate in the prosecution of others only on those terms
has little of value to offer to the government.\footnote{\label{usbrief} United 
States v. Mezzanatto,
Brief for the United States (1994).}
 \vspace*{-12pt}\end{small}
 \end{quotation}

      This explains why the  government may find a  Rule 410 waiver for 
impeachment useful. Such a waiver  gives every incentive for the defendant to be 
truthful in his plea negotiation interview, and if he cannot be truthful with 
that incentive, he  is unlikely to be useful on the witness stand.\footnote{``If 
the government lacks effective means of policing
the truthfulness of the information proffered by the
defendant -- such as the protection supplied by the
agreement condemned by the court below -- the defendant's
testimony will be subject to ready impeachment when the
government attempts to use it in the prosecution of others.''  Ibid,  note 8.}
 This even applies to  a defendant  who is  not willfully lying. Willful or not, 
if he cannot tell the truth, the prosecutor does not want to buy his  testimony.  
Mr. Mezzanatto's brief notes that  Rule 410 waivers will hurt defendants who 
give inaccurate plea statements because of ``confusion, mistake or faulty 
memory.'' Such people, however, who  cannot tell the truth  even when their  
prison term is at stake,  are precisely the sort of witnesses the government 
does not want on the stand.\footnote{
{\it Mezzanatto} Respondent Brief, {\it supra} note \ref{dahlin},   in text near 
note 22. }
   
 
      
   
 Why will the defendant be more truthful having signed a waiver?
Assume that the defendant can either be completely truthful  or tell
some lies during plea bargaining.  If he is truthful, and has signed
a waiver, he increases his sentence by $L_d$ if the case goes to
trial. If he lies, then $L_d$ can take one of two values. It is zero
without a waiver.  With a waiver, it is zero if he is not caught
lying, but with probability $\gamma$, the prosecutor catches him out,
and $L_d= W$.  He will refrain from lying if 
 \begin{equation} \label{e1}
    L_d <   (1-\gamma) (0) +    \gamma W.
 \end{equation}
   Thus, we would expect the prosecutor to ask for waivers when he
expects them to deter lying and when he derives value in other cases
from truthtelling in this one, which is when $\gamma$, the
probability of detecting a lie and $W$, the adverse consequences to
the defendant from being caught in a lie, are sufficiently large.  If
they are, then waiver of Rule 410 will induce the defendant to
provide truthful statements that can be used in other trials, and $Z_p$
will be positive. 

 This also tells us when a waiver would not be useful.  If the
defendant would not testify in his own case under any circumstances,
because his credibility is already low or he does not want the jury
to hear impeachment evidence of his bad character, then he cannot
make the value of his cooperation credible to the prosecutor, and the
prosecutor has no incentive to ask a waiver. If he did, however, the
defendant would grant it, since if he does not intend to testify, the
waiver is costless to him. 

   This argument also suggests a related reason for limited waivers:
that the defendant wants to give credibility to his statements for
the sake of the plea bargaining itself, even if he has no cooperation
to sell.  Rule 410 specifically excludes statements made under oath
from inadmissibility in future criminal proceedings for perjury. This
clause is of advantage to the defendant as well as to the prosecutor,
for it allows the defendant to claim more persuasively that he is
telling the truth if he is under oath.  Limited waivers for
impeachment might serve the same purpose, allowing the defendant to
increase his credibility by imposing upon himself penalties if he
lies.  As a result, he may be able to more plausibly demonstate the
strength of his case and obtain a better plea bargain.  

 




\bigskip
\noindent
5. Penalty  Bargaining

 So far  I have been discussing cooperation bargaining, which is the main 
context for waivers of Rule 410.  Every cooperation agreement, however, also 
contains elements of the second kind of plea bargaining: penalty bargaining.  In 
pure penalty bargaining, cooperation is not at issue, but  both sides wish to 
avoid trial and they must decide how to split the gains from settling out of 
court.  
   
      The economics of bargaining  seems  a natural tool for
addressing the question of whether waivers increase or
decrease the number of successful penalty  bargains. 
Economists    have used formal modelling to address the issue of
whether plea bargaining increases or decreases social
welfare, but the emphasis in those articles is on risk
aversion and how the parties interpret each others'
offers rather than on the impact of failed plea bargains
on what happens at trial.\footnote{ Gene Grossman and 
Michael Katz, Plea Bargaining and Social Welfare,  73{ 
American Econ. Rev.} 749 (1983); Jennifer
Reinganum,  Plea Bargaining and Prosecutorial
Discretion, 78 { American Econ. Rev.}   713 (1988).  
See also the survey by  Robert  Cooter   and  Daniel Rubinfeld, 
 Economic Analysis of Legal Disputes and Their
Resolution,   27 { J. Econ. Literature}  1067 (1989)  } 

  The model that comes closest to addressing the questions that arise
when material from failed plea bargaining is introduced as evidence
at trial is Daughety \& Reinganum.\footnote{Andrew Daughety  \& Jennifer 
Reinganum ,  Keeping Society in
the Dark: On the Admissibility of Pretrial Negotiations as Evidence
in Court,  26 {  RAND J. of Econ.},   203  (1995).}  They construct a model of
civil litigation with which to answer the question of whether
settlement offers ought to be admissible at trial if settlement fails
to occur.  They show that admitting settlement offers results in less
settlement, because the parties have more incentive to bluff with
tougher offers.\footnote{The model they use is a descendant of the
model used in Jennifer Reinganum \& Louis Wilde, Settlement,
Litigation, and the Allocation of Litigation Costs, 8 {  RAND
J.   Econ.}  109 (1986).  } Once the offers are admissible,
such bluffing has the advantage that the offers can be admitted as
evidence at trial even if the bluff fails to work. On the flip side,
generous offers have the disadvantage that they hurt the side
offering them if they are admitted into evidence.  Rigorous analysis
confirms what intuition suggests: allowing bargaining discussions to
be admissible has a chilling effect, hampering the parties' efforts
to come to an agreement because neither party will want to disclose
any of their information. 

  In the criminal context, the Daughety \& Reinganum discussion would
apply to specific offers to plead guilty to greater or lesser
offenses, or to specific government offers to mitigate penalties.
Such offers are part of Rule 410, but the analysis is unsatisfactory
for dealing with {\it Mezzanatto} for two reasons.


 First, what is disclosed in the Daughety \& Reinganum model is not
direct information--- ``I was there on the night of November
24th''--- but settlement offers that signal a party's opinion of the
strength of his case--- ``I will plead guilty to robbery, but not
murder.''  The defendant does not have to worry about accidentally
making a settlement offer, as he does about factual admissions, and a
settlement offer cannot be used to impeach a witness or to rebut his
testimony.  

 Second, the model is addressed to the issue of inflexible
legal rules, not waivers.  Daughety \& Reinganum show
that there are more settlements under a rule of
inadmissibility of settlement demands. But this does
not tell us why inadmissibility should be a mandatory
rule, rather than a default rule that could be waived by
mutual consent.    Given a choice between two inflexible
rules, inadmissibility is best in their model. 
Forbidding waivers seems superfluous, though, because
the inefficiency of admissibility means that the    party
that desires admissibility would not be willing to give
up enough to persuade the other side to grant
admissibility.   
    
For a similar reason,  Rule 410 is a sensible default
rule.  If disclosures during plea bargaining were admissible, there
would be less plea bargaining because some defendants would be
unwilling to bargain at so great a cost.  Prosecutors would
voluntarily agree to restrictions like Rule 410 on a case-by-case
basis, because they too want to avoid trial.  Making Rule 410 the
default rule makes these case-by-case agreements unnecessary, and so
reduces costs. 

 That explains why Rule 410 is a good default rule, but not why it
should be a mandatory rule.  Under the reasoning of the previous
paragraph, no defendant would want to sign a waiver, and so making
waivers invalid should be unnecessary.

  In general, voluntary transactions benefit both sides of the
transaction. If defendant and prosecutor both agree to a waiver, why
should the law prevent it?  The law allows plea bargaining in
general, for example, which is effectively the waiver of a trial in
return for a reduced sentence.  The puzzle is what benefit the
defendant obtains from waiving the Rule 410 exclusion.  He can then
enter into plea bargaining, which is itself beneficial, but if he is
so eager to make a bargain, why does the prosecutor not take
advantage of that in the terms of the plea bargain itself, rather
than in the preliminaries?  

   The general principle that trade is efficient does, however, have
exceptions, which might provide an explanation.  If the transaction
has negative external effects on third parties, for example, it might
be inefficient even if it benefits the two parties directly involved.
That will not be a problem here, since the negative effect on third
parties would be an increase in the probability of going to trial,
which is not something that benefits either defendant or prosecutor.
What raises more questions is whether the waivers might serve a
strategic purpose for the prosecutor, so that the defendant would
like to be restricted not to agree to them, and would gain more from
such a restriction than the prosecutor loses.  

  The analysis below will raise a number of both efficiency-enhancing
and strategic explanations for waivers.  Waivers might be efficient
if it is more costly for prosecutors than for defendants to enter
into negotiations, so that prosecutors need extra inducement.  They
may also be efficient if they help defendants make credible their
ability to help prosecutors with testimony in other cases.  On the
other hand, waivers may be a strategic tool for the prosecutor to
leverage up his bargaining power, in which case prosecutors might use
them even if they reduce the rate of settlement. 
 
     The discussion will begin with a simple model to show that it is
not enough to say simply that the prosecutor has more bargaining
power and can therefore extract the waiver as a concession.  The next
step is to see what is special about information disclosure during
plea negotiations, and how prosecutors might use waivers either to
balance advantages of the defendant or to exploit the prosecutor's
own advantages.  The last part of the discussion will be about
implications of waivers for the defendant's ability to bargain using
his potential testimony in other cases. 

  




\noindent
5.1  Use of the Waiver as a Bargaining Tool

 Let us take the model of earlier the paper and simplify it  by assuming that 
the plea bargaining is purely penalty bargaining, not cooperation bargaining, 
because the defendant has no
information to offer. In that case, $Z_p=Z_d=0$.
 
  The exact payoffs, the point on the hypotenuse in Figure 1  which is the 
actual
outcome, depends on the bargaining power of the two sides.  Let us
use $\beta$ to parameterize the prosecutor's bargaining power, so
that the settlement will yield him payoff $T -C_p + \beta( C_d+C_p)$,
giving him fraction $\beta$ of the surplus from avoiding trial.  If
the prosecutor had no bargaining power, then $\beta =0$, and the
settlement would be $X=T -C_p$.  The defendant would cooperate, but
would have bargained for such a low sentence in his own case that the
prosecutor would be no better off than if he had gone to trial.  If
the prosecutor had all the bargaining power, then $\beta =1$, and the
settlement would be $X=T +C_d$.  The defendant would cooperate, but
would have effectively given away his cooperation, and would be no
better off than if he had gone to trial.  We will assume that $\beta$
is strictly between 0 and 1, so both sides have positive bargaining
power.  


 
  The case of equal bargaining power, with $\beta = .5$, is the Nash
bargaining solution conventionally used in economics.\footnote{See
John Nash,  The Bargaining Problem, 18 {Econometrica}
  155 (1950); Ariel 
    Rubinstein, Perfect Equilibrium in a Bargaining Model, 50
{Econometrica} 97 (1982). } A greater value, such as $\beta =.8$,
would be appropriate if the defendant is poorly represented, so that
the prosecutor gets most of the gains from the bargain.  This would
result in an outcome like Point A in Figure 1, where the sentence is
actually greater than its expected value as a result of a trial, $T$.
A plea-bargained sentence greater than the expected value of the
sentence is not anomalous; it would result whenever, for example, the
prosecutor has the greater bargaining strength, there is no benefit
to the prosecutor in other cases from the defendant's cooperation,
and the defendant has higher costs of going to trial, i.e., $\beta
>.5$, $Z_p=Z_d=0$, and $C_d> C_p$.  Despite this, the defendant still
gains from the plea bargain, because he has avoided the cost of going
to trial. The goal of plea bargaining is not for a litigant to do
better than his opponent, or to reduce his opponent's welfare, but to
do as well for himself as possible.  A plea bargain that results in a
sentence higher than the expected outcome at trial can still benefit
the defendant because of the added certainty, speed, and trial cost
savings.  Conversely, a low sentence can still be of benefit to the
prosecutor, for the same reasons.\footnote{It may well be that
$\beta$, $C_d$, and $C_p$ are related.  The prosecutor will have more
bargaining power (higher $\beta$) if he has better staff relative to
the defendant, which means higher prosecutor trial costs (higher
$C_p$) and lower defendant trial costs (lower $C_d$).  Thus, the case
where $\beta =.8$ and $C_d > C_p$, so that $X$ is much greater than
$T$ may be implausible.  If the prosecution has an expensive lawyer,
he gains from the effect of more skilled bargaining, but loses from
the effect of a less plausible threat to incur the expenses of trial.
Links between $\beta$, $C_d$, and $C_p$, however, would not affect
the analysis in this paper. } 

 
 This  model makes more precise what is
meant by ``bargaining power''.  I have distinguished between the
parameters which determine the threat point and bargaining region, on
the one hand, and the single parameter $\beta$ which determines where
in the bargaining region the outcome will occur.  This is useful
because it shows that there is scope for mutually beneficial
bargaining even if the situation is desperate for the defendant.  If
he is certain to be convicted  of a serious crime (large $T$), frantically 
wishes to avoid trial (large
$C_d$), and has no information to trade ($Z_p=0$), he still has
bargaining leverage.  This is because the prosecutor still wishes to
avoid trial, because $C_p>0$, and would be willing to make some
concessions.  It is meaningful to say that the defendant could have a
high degree of bargaining power ($\beta$ near zero), because that has
a precise meaning that matches the situation: the defendant, although
he begins in a very bad situation, can reap most of the gains from
bargaining, and reduce high sentence by almost $C_p$, even though the
resulting plea bargain sentence would still be long.  Bargaining
power concerns how much of the surplus each party ends up with, not
with whether their starting points are strong or
weak.\footnote{Whether a bargainer's starting point is strong or weak
might, of course, depend on the outcome of previous bargaining, but
that is not the case in the present context.  If the defendant faces
a long sentence at trial, it is because of the facts of the case and
the state of the law, not because of his personal bargaining
effectiveness.} 
 
 

   In this model, plea bargaining is always successful.  Each side
would prefer to settle, and so settlement occurs.  This is much
simpler than asymmetric information models such as Reinganum (1988),
but it helps establish a meaning for the concept of bargaining power.
If the defendant agrees to a plea bargain, it must benefit him, or he
would not agree.  Bargaining power concerns only {\it how much} it
benefits him.  That is still a matter of great concern, but it would
be very misguided for the law to eliminate plea bargains on the
grounds that defendants gain less from them than prosecutors do. Even
if that were true, which is difficult to establish, banning a
practice that benefits defendants just because it does not benefit
them enough would not be doing them a favor.  This point will be
important next, when we discuss waivers.




\bigskip \noindent
  {\it  5.2   Information Disclosure During Plea Bargaining}

    Now let us add the complication that some information is
disclosed during plea negotiations without being bargained for. This
might occur because each side is disclosing information to try to
show the strength of its case, or by accident.  If the plea bargain
breaks down, this disclosure, if admissible as evidence or useful  as
background information, could be used to the disclosing side's
disadvantage when the case comes to trial. Looking ahead, each side
must decide before entering into plea bargaining whether the ultimate
outcome will be to its advantage.  

  It is important, first, to realize that the government   does incur costs from  
entering into plea bargaining, particularly in cooperation bargaining, but also 
in penalty bargaining.  For many defendants, the government's expectation of the 
value of their cooperation is so small that it is not even worth the cost of a 
meeting to explore the subject.  As the government brief in {\it Mezzanatto}  
puts it, 
     \begin{quotation}
 \vspace*{-6pt}\begin{small}
   In addition, a prosecutor's decision to meet with a
defendant and his counsel for the time necessary to
evaluate proffered cooperation ordinarily entails a
significant commitment of prosecutorial resources,
not only for the prosecutor himself, but also for
investigative agents who must be present during the
interview, prison officials who must make the defendant
available when he is incarcerated, and foreign language
interpreters who must be present when the defendant is
not fluent in English.  Meetings with a defendant and his
counsel to assess proffered cooperation frequently
will occupy a day in the schedule of the prosecutor and the
law enforcement agents involved, and still more time to
check the defendant's story against other leads. 
Because a prosecutor cannot allocate those resources to
every defendant who expresses a possible desire to
cooperate with the government, the prosecutor must
choose those prospects that are most likely willing to
furnish truthful information.\footnote{{\it Mezzanatto} U.S. Brief, {\it supra} 
note \ref{usbrief}.   }
 \vspace*{-12pt}\end{small}
 \end{quotation}

            Besides the  expenses in terms of time and resources, the government 
may wittingly or unwittingly reveal useful information to the defendant in the 
course of plea negotiations, just as the defendant may reveal it to the 
government, with the difference that Rule 410 does not protect the government 
from its disclosures.  This is especially important because  of the limited 
amount of  discovery available in criminal cases.\footnote{\label{stuntz}   
``The Fifth Amendment has been thought to limit most
discovery directed against the defendant, and considerations of
parity, together with a mix of other concerns, long led most states
to deny virtually all discovery directed against the prosecution.''
Sanford  Kadish,  Stephen Schulhofer \& Monrad  Paulsen, CRIMINAL LAW AND ITS 
PROCESSES    143  ( 4th Ed.  1983). 
   Robert Scott  \& William Stuntz,  Plea Bargaining as
Contract, 101 Yale LJ 1909, 1937
(1992)   note that the police report is not discoverable by
the defendant and ``... at the time of settlement negotiations, a
criminal defendant has much less knowledge of the government's case
than, say, a civil defendant has of a civil plaintiff's case against
him.''  }  The government brief in {\it Mezzanatto} complained of this: 
 \begin{quotation}
 \vspace*{-6pt}\begin{small}
     Under the court's holding, 
a defendant will be free to use his proffer of cooperation
merely as an opportunity to ``try out'' a story on the
prosecutor.  That tactic will permit the defendant to gain
the best of all worlds: favorable treatment if the
prosecutor is persuaded, and an opportunity to swear to a
different version of the events at his trial (without fear
of contradiction and aided by any facts he learns during the
proffer session) if the prosecutor is not persuaded.\footnote{{\it Mezzanatto} 
U.S. Brief, {\it supra} note \ref{usbrief}. }
 \vspace*{-12pt}\end{small}
 \end{quotation}
  The government perhaps felt this especially keenly because Mezzanatto did 
exactly that, having discovered in the plea bargaining interview that the 
government had  information which disproved his initial story. 
     \begin{quotation}
 \vspace*{-6pt}\begin{small}
 That is exactly what respondent attempted to do in
this case.  After failing to persuade the prosecutor, respondent not
only testified to a completely different version of his involvement
in methamphetamine trafficking, but he also took care to admit that
he had been present on Shuster's property on the day before his
arrest -- and thereby attempted to neutralize the surveillance
evidence about which he learned during the meeting.  Indeed, defense
counsel argued in summation that the jury should believe respondent's
story because that story was confirmed by the government's own
surveillance evidence. \footnote{{\it Mezzanatto} U.S. Brief, {\it supra} note 
\ref{usbrief} at  note 9.}
 \vspace*{-12pt}\end{small}
 \end{quotation}

      The  government's statements to  the defendants can even be used to 
impeach government witnesses, an additional risk.  
No article on criminal procedure in the late 1990's would be complete without a 
reference to the O.J. Simpson trial, and one is actually relevant here.   
Detective Philip  Vanatter  talked to  government informers Craig and Larry 
Fiato  about   going to Simpson's house after Mrs. Simpson was found murdered, 
and  they took the stand for Simpson   to impeach Vanatter's testimony.  Talking 
to  criminals is a risky business.\footnote{Trott (1996), {\it supra} note 
\ref{trott} at  1396.}
 
 

Thus,   engaging in  plea negotiations  is potentially costly    to the 
prosecutor as well as to the defendant.  Let us 
  denote the expected decline in the   penalty due to prosecutor disclosures 
during plea negotiations by 
  $L_p$, and   the expected increase due to  defendant  disclosures by
$L_d$.  Under Rule 410, the defendant's disclosure is inadmissible,
so $L_d=0$. Under a waiver of Rule 410, the defendant's disclosure is
admissible, so $L_d$ is greater than zero.\footnote{For game theory
aficionados: I am using a reduced-form model of asymmetric
information here, rather than the usual signalling game of incomplete
information.  You should not think of the players as updating
Bayesian priors when information is revealed. Rather, this is a game
in which a move called ``information disclosure'' is assumed to be
required for plea bargaining but also changes the payoffs from trial.
The model is useful for looking at the decision to enter into plea
bargaining, but takes as given that information must be revealed in
the plea bargaining process. 


 More generally, $L_d$ and $L_p$ could be viewed as including the
transaction costs of bargaining, though in that case $L_d=0$ would
not be true for the defendant even under Rule 410 unless he is
represented by the public defender and does not pay any cost from the
time spent bargaining.} 

 
 
 It will be most convenient to analyze the outcome under waiver of
Rule 410 first, and then analyze the outcome with Rule 410. 
 
\bigskip
\noindent
 {5.3  The Outcome Under Waiver of Rule 410}

 If both side's disclosures are admissible, the expected penalty
rises by $(L_d-L_p)$, which might be a negative number. 
 The changes the settlement under the bargaining process modelled
earlier to 
   \begin{equation} \label{e5}
  T +L_d -L_p -C_p  + \beta( C_d+C_p). 
 \end{equation}


 A settlement of amount (\ref{e5}) might result in lower payoffs to
one party or the other than his expected payoff from going to trial.
That party would then refuse to enter into plea bargaining.
Successful plea bargaining will be blocked by the prosecutor if 
  \begin{equation} \label{e6}
(T +L_d -L_p -C_p + \beta( C_d+C_p))  < T - C_p,
\end{equation}
   because he will do better by going to trial, given how much he
weakens his bargaining position by his disclosures during plea
bargaining.

 Similarly, the defendant will refuse to enter into plea bargaining
if \begin{equation} \label{e7}
  T +L_d -L_p -C_p + \beta( C_d+C_p) >  T + C_d .   
\end{equation}

   Rearranging the inequalities, the prosecutor will block plea
bargaining if 
  \begin{equation} \label{e9}
 \beta(C_d+C_p)   < L_p - L_d  
 \end{equation}
 and   the defendant  will block it  if 
 \begin{equation} \label{e10}
 -(1- \beta) (C_d+C_p)    >  L_p - L_d  .  
 \end{equation}
    We can conclude that if either $L_p$ or $L_d$ is too large
relative to the other, plea bargaining will break down. The exchange
of useful information must be roughly equal for both parties to be
willing to reveal their information.  

 Figure 2 shows this graphically.  Plea bargaining succeeds in areas
B and C, where the disclosure losses of the defendant and prosecutor
are of comparable size. In area A, bargaining breaks down because the
prosecutor fears that the defense will learn too much during the plea
bargaining, or his costs of  setting up plea discussions are too  high. In areas 
D and E, it breaks down because the defendant
fears the prosecutor will learn too much.  
 
Each case will have its individual parameters and lie in one of these five 
regions.  Which is the most common kind of case?  This author cannot claim   
expertise in this area, but I  hope that this framework may be helpful to those 
that can.   The government claimed in {\it Mezzanatto} that the government did 
not wish to devote the resources to talk to many defendants, so that  area E 
held many cases,  but  whether that is true or not is beyond the scope of this 
paper.    

 

 \epsfysize=3in 
 \epsffile{mezz3.eps} 
    \begin{center} {\bf Figure 2: Conditions Under Which a Bargain is
Made } \end{center}

  


\bigskip
\noindent
 {5.4 The Outcome Under   Rule 410}

 If Rule 410 prevents the prosecutor from making use of the
defendant's statements, then $L_d$ drops from the payoffs.  The
settlement amount becomes 
  \begin{equation} \label{e11}
 T  -L_p -C_p + \beta( C_d+C_p) .
 \end{equation}


Again, our concern is whether the settlement  will 
  lie within the range $   [T - C_p,T + C_d]$. 
Successful plea bargaining will be blocked by the prosecutor  if 
  \begin{equation} \label{e12}
 \beta(C_d+C_p) < L_p     
 \end{equation}
and by the defendant if 
 \begin{equation} \label{e13}
C_d +  \beta(C_d+C_p) >    - L_d.   
 \end{equation}
    This means that the defendant will never block plea bargaining, but
the prosecutor is more likely  to than when Rule 410 is waived.  In
Figure 2, plea bargaining succeeds in areas C and D, but fails in
areas A, B and E.  In areas C and D, the prosecutor's loss from
disclosure during plea bargaining is low, and under Rule 410, the
defendant's loss is irrelevant.  In areas A, B and E, the
prosecutor's loss is high enough that he blocks disclosure . 

  The problem under Rule 410 is that the prosecutor fears that his
trial position will become worse relative to the defendant's as a
result of unsuccessful plea bargaining.  If he were to agree to enter
plea bargaining negotiations and were to lay out his case as
persuasively as he could, the defendant would listen attentively, but
then threaten to break off plea bargaining and use this rehearsal to
prepare for trial.  The defendant might also have disclosed
information, but Rule 410 would make the disclosures inadmissible at
trial.  As a result of this threat, the prosecutor would be forced to
agree to a generous sentence reduction to avoid the cost of trial.
In the end, he would wish he had never tried plea bargaining in the
first place.  


 

\noindent
 {5.5  Bargaining over the Waiver}
   
       It is of course not necessary to limit ourselves to pure
regimes of Rule 410 or no Rule 410.  What if the prosecutor has the
option to ask for a waiver of Rule 410 and the defendant has the
option to refuse, on a case-by-case basis?\footnote{The exclusion
waiver converts from no-admissibility to admissibility.  To go the
other way, starting from a regime in which Rule 410 did not exist,
the prosecutor would have to agree to a special exclusion provision.
This, in effect, is what a grant of limited or full immunity from
prosecution does.  Immunity is a special waiver by the prosecutor of
his right to prosecute the defendant or to make use of his
disclosures to prosecute him.    } 


Bargaining over whether to have an exclusion waiver can be modelled
as a preliminary move.  It is different from bargaining over the
penalty in that the good being bargained over cannot be split-- there
is either a waiver or there is not.  

If a plea bargaining would be successful even without the waiver,
then the prosecutor gains and the defendant loses from the waiver.
This happens in area C of Figure 2, where the disclosure losses are
small.  The effect of the waiver is then to increase the settled
penalty from $T +L_d -L_p -C_p + \beta( C_d+C_p)$ to $T
-L_p -C_p + \beta( C_d+C_p)$, an increase of $L_d$.  
 
 Why would the defendant ever agree to a waiver if it ends up hurting
him?  He would agree if he still benefits from successful settlement
overall instead of going to trial, and if the prosecutor can credibly
threaten to break off plea bargaining if the waiver is not signed.
Whether the prosecutor can credibly threaten this depends on local
circumstances, but if he can, then the defendant's concession of
signing a waiver acts as an admission ticket to plea bargaining
negotiations. The admission ticket has a price, but a low enough
price that the defendant is willing to pay it.\footnote{This is an
example of how splitting up negotiations into sequential parts can be
a way for one side to leverage up its bargaining power.  If
indivisible parts can be separated out, and the better bargainer wins
on indivisible issues, then instead of winning, say sixty percent of
the indivisible issues when they are bargained over as a group, the
better bargainer can win all of them sequentially.  This example is
particularly interesting because the waiver issue cannot be bargained
over at the same time as the penalty, involving, as it does, the
issue of whether to exclude the information revealed during the
penalty bargaining.  } 

If plea bargaining would be unsuccessful without the waiver and
successful with it, then both prosecutor and defendant gain from the
waiver, because both prosecutor and defendant payoffs are bigger from
successful settlement than from trial.  This happens in area B in
Figure 2, which applies when 
   \begin{equation} \label{e14}
L_p - L_d>  \beta(C_d+C_p) > L_p,    
 \end{equation}
  that is to say, when the disclosure losses are relatively large,
but are roughly equal for the prosecutor and the defendant. 

 If the defendant would not agree to a waiver, under the parameters
in area D, the prosecutor would not ask for one.  If he did, and was
turned down, then he would lose his share of the bargaining surplus.
Thus, we would expect waivers not to be requested if the defendant
has sufficiently more to lose from information disclosure in plea
bargaining than the prosecutor does.
 
It may also happen that plea bargaining is unsuccessful either with
or without the waiver, in which case neither side gains or loses from
the possibility of waiver.  This happens in areas A and E in Figure
2.  

From the point of view of society, it is in one respect difficult and
in another respect easy to tell whether waivers are helpful.  What is
difficult to know is the effect on the penalties imposed.  Presumably
$T$ is the optimal settlement, since it depends on the
expected judgement of the law and not on the costs and bargaining
strengths of the prosecutor and defendant. We cannot say without
knowing the costs and bargaining strengths whether waivers move the
settled penalty closer to $T$ or further from it.

 
 In another respect it is easy to see a way in which waivers are
helpful: they increase the probability of settlement, to the benefit
of both sides.  Thus, if the aim of Congress is to increase the
amount of settlement, {\it Mezzanatto} , allowing voluntary waiver of
Rule 410 by the defendant would seem to be helpful.  

\noindent
 {5.6 The Strategic Advantages of the Prosecutor}

 The analysis above provides reasons why waivers would help both
sides, by making the prosecutor willing to enter into plea
bargaining.  In some circumstances, the prosecutor's motive for
requiring the waiver was purely strategic, to take better advantage
of his superior bargaining power, but that did not reduce the amount
of successful bargaining-- it only shifted the terms in the
prosecutor's favor.  We now come to a strategic move which might
actually hurt efficiency, because the prosecutor is willing to reduce
the amount of successful bargaining if he can improve the terms
enough. 
     
   An important difference between prosecutor and defendant is that the 
 prosecutor represents an office which is involved in many cases, not
just one.  The office might benefit from a tough policy in the long
run, even if this imposed a cost in the short run.  This may itself
be a reason for the prosecutor to have more bargaining power ($\beta
>.5$), because he has a reputation for toughness to preserve.  A
second effect, however, is that the prosecutor's office can rely on
inflexible bureaucratic rules to commit itself to tough policies.  We
have seen above that if the prosecutor has most of the bargaining
power ($\beta >.5$), then his best option is to ask for waivers on a
case-by-case basis, asking only when he expects the defendants to
grant them.  In this respect, bargaining over the waiver is no
different from plea bargaining generally; even someone in a strong
bargaining position will not willfully overreach and ask for more
than could possibly be granted.  If, however, the prosecutor has a
weak bargaining position in each individual case ($\beta <.5$), then
he might take advantage of bureaucratic inflexibility to set a
general rule of requiring waivers.  If that happens, the prosecutor
could benefit overall, from additional agreement in area B (where the
prosecutor's disclosure losses are higher), and better bargains in
area C (where the losses of both sides are low), even though he loses
from having fewer agreements in area D (where the defendant's
disclosure losses are high).  
 
       Use of bureaucratic rules of this kind is analogous to use of
standard-form contracts. Alan Schwartz  and  Louis L.  Wilde  have shown  that a
monopolist would rather use his market power to increase price than
to introduce inefficient contract terms.\footnote{ Alan Schwartz \& Louis L.  
Wilde, Imperfect Information in Markets
for Contract Terms: The Examples of Warranties and Security
Interests, 69 VA. L.  REV. 1387 (1983).}  Robert Scott and William Stuntz  
mention  that  argument in relation to plea bargaining
and note that in any case, each plea bargain is different, rather
than being like a standard form, so that the arguments against
contracts of adhesion do not apply againt plea bargaining.\footnote{Scott \& 
Stuntz (1992), {\it supra} note \ref{stuntz}. } 
 The waiver
agreement, however, is a special case.  It can literally be a
standard form, not tailored to the particular case.  And although a
strong prosecutor would prefer to use waiver agreements,
case-by-case, a weak prosecutor would prefer to use a blanket rule,
so as to commit to a tough position.  

 
  Thus, it may be that allowing waivers would reduce the amount of
successful plea bargaining, but this depends on hard-to-measure
parameters.  It is not enough that the prosecutor benefits from
waivers at the expense of the defendant-- it must be that he benefits
enough to make up for increased failure in plea bargaining.  If the
defendant has more to lose from disclosures during plea bargaining
than does the prosecutor, so that area D is important, it seems
unlikely that the prosecutor would want to commit to a policy of
requiring waivers. Whatever advantage he gained in better bargains in
area C would be outweighed by the losses from failed bargaining in
area D. Moreover, the better bargains in area C would be large only
if $L_d$ is large, but that is precisely the situation in which not
area C, but area D is appropriate.  




\bigskip 
\noindent
 {  6. Conclusions }  

{\it Mezzanatto} is a particularly interesting case for analysis because it 
requires so many of the tools of economic analysis without seeming to have any 
economics in it at all.  Yet the  basic situation is a market transaction, the 
trade of one good for another.  As  a result, the insight of  price theory that 
trade benefits both parties  is relevant, but  we cannot stop with the theory of 
Adam Smith.  Plea bargaining  is not a situation of anonymous market competition 
for a good of known quality, but   the negotiation of a relational contract, 
difficult to enforce and for a good of unknown quality, where  two parties are 
in a bilateral monopoly and each seek to  move the terms of transaction to his 
own advantage.   These strategic considerations  make the newer insights of game 
theory valuable.

 Indeed, it is the strategic complexities which  result in  the  opposite   
conclusions  of different judges who have heard the case.  On the one hand are 
judges like Judge Wallace and Justice Thomas   who  view the situation from the 
laissez faire position that  increasing the flexibility of the terms of trade 
must benefit both sides of the transaction. On the other are judges like Judge 
Sneed and Justice Souter who   are deeply suspicious of such flexibility and 
think that it will result in less and more one-sided trade, because  it will be 
used by prosecutors to increase  their gains from bargaining.  

  My conclusion is that  the judges with     laissez faire instincts have come 
to the right conclusion  with respect to allowing waivers of Rule 410, but that   
a full  analysis requires  quite a bit more complexity to deal with  the 
legitimate fears  to which strategic bargaining gives rise, and due 
consideration to  the role Rule 410 waivers fulfill in  the world of practical 
criminal prosecution.  Proffer letters commonly {\it are} one-sided, but this  
is not to the disadvantage of defendants.  Rather,   they are in the desperate 
postion of having  something to sell but without  having the ability to   
guarantee delivery or the quality of the product.  Placing themselves  at the 
mercy of the prosecutor  provides this guarantee, and allows them to sell their 
product.  The system only works, however, because prosecutors wish to  hold up 
their end of the bargain to preserve their reputations for future negotiations

  The  frequency of Rule 410 waivers in  cases where cooperation bargaining 
takes place and the infrequency where  pure penalty bargaining takes place lends 
support to this theory.   Rule 410 is waived not because the prosecutor has the 
greater bargaining power, but because in certain kinds of cases  the defendant 
needs to establish his  willingness to  provide cooperation and to show that he 
is truthful enough that that cooperation will be useful to the prosecutor.   
Whether or not the defendant has a good bargaining position will determine   how 
much he gets for his cooperation, but   even a defendant with a strong 
bargaining position would want to  establish his  credibility by use of a Rule 
410 waiver, in order to maximize the concessions he can extract from the 
prosecutor.  

  This theory   suggests that  not only waivers of Rule 410 for puposes of 
impeachment but for use in the case-in-chief should be valid, but also suggests 
why we do not observe the broader waivers in practice.  
 Justice Souter's dissent is correct that prosecutors will charge all that   
traffic will bear in the plea bargaining market, but wrong in his estimate of 
how much traffic will bear.    In the economic marketplace,  we  allow  bakers 
to charge all that traffic will bear for bread, but the consequence is not mass 
starvation.   Similarly,      it seems  that usually  defendants will agree to a 
proffer agreement  waiving Rule 410 for impeachment, but not  for the case-in-
chief.   On occasion, we do see such agreements,  of ten in exchange for 
complete immunity if the defendant cooperates fully, but they are not the norm, 
and when they do occur,  it can be justified as a means for the defendant to 
guarantee the quality of a special informational  product he is selling. 

  
%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


\end{document}
