THE PUBLIC'S DECISION VARIABLES ARE ITS EXPENDITURES ON POLICE, COURTS, ETC., WHICH HELP DETERMINE THE PROBABILITY (P) THAT AN OFFENSE IS DISCOVERED AND THE OFFENDER APPREHENDED AND CONVICTED, THE SIZE OF THE PUNISHMENT FOR THOSE CONVICTED (F), AND THE FORM OF THE PUNISHMENT: IMPRISONMENT, PROBATION, FINE, ETC. OPTIMAL VALUES OF THESE VARIABLES CAN BE CHOSEN SUBJECT TO, AMONG OTHER THINGS, THE CONSTRAINTS IMPOSED BY THREE BEHAVIORAL RELATIONS. ONE SHOWS THE DAMAGES CAUSED BY A GIVEN NUMBER OF ILLEGAL ACTIONS, CALLED OFFENSES (O), ANOTHER THE COST OF ACHIEVING A GIVEN P, AND THE THIRD THE EFFECT OF CHANGES IN P AND F ON O. 'OPTIMAL' DECISIONS ARE INTERPRETED TO MEAN DECISIONS THAT MINIMIZE THE SOCIAL LOSS IN INCOME FROM OFFENSES. THIS LOSS IS THE SUM OF DAMAGES, COSTS OF APPREHENSION AND CONVICTION, AND COSTS OF CARRYING OUT THE PUNISHMENTS IMPOSED, AND CAN BE MINIMIZED SIMULTANEOUSLY WITH RESPECT TO P, F, AND THE FORM OF F UNLESS ONE OR MORE OF THESE VARIABLES IS CONSTRAINED BY 'OUTSIDE' CONSIDERATIONS. THE GENERAL CRITERION OF SOCIAL LOSS IS SHOWN TO INCORPORATE AS SPECIAL CASES, VALID UNDER SPECIAL ASSUMPTIONS, THE CRITERIA OF VENGEANCE, DETERRENCE, COMPENSATION, AND REHABILITATION. A MATHEMATICAL APPENDIX DERIVES THE EFFECTS OF CHANGES IN VARIOUS PARAMETERS ON THE OPTIMAL VALUES OF P AND F. (AUTHOR ABSTRACT)