The research is based on a national policy experiment funded by the Office of Juvenile Justice and the National Institute of Justice. This experiment was designed to compare the effects of restitution against traditional sanctions of probation and incarceration and to explore decision processes through which policy responses to crime influence subsequent behavior. Research findings showed that juvenile delinquents convicted of felonies and serious misdemeanor offenses did not reduce their propensity to commit subsequent crimes as a function of their perceptions about the certainty and severity of punishment. For the most chronic offenders, there was a relation between perceptions of punishment severity and reduced recidivism. Overwhelming evidence, however, indicated that incarceration had no discernible effect on perceptions of the certainty and severity of punishment. Instead, incarceration and detention increased remorse but also damaged the individual's self-image. Community-based restitution and work service programs were more effective in reducing illegal behavior than traditional probation. The success of these programs required that courts provide assistance to juveniles in developing and implementing restitution orders. Perceptions regarding the certainty and severity of punishment are discussed as well as the juvenile's sense of citizenship, ideas of fairness, and feelings of remorse. Alternative policy responses to juvenile crime are considered, and decision processes through which juvenile justice system experiences affect perceptions and criminal activities are explained. 149 references, 28 tables, and 15 figures