At the beginning of a criminal trial, the defendant is asked to plead guilty or not guilty. This paper shows that the pleading decision serves as a signaling device. Guilty defendants to whom mitigating circumstances apply plead guilty, while innocent defendants and defendants to whom aggravating circumstances apply plead not guilty. With a view of imposing proper sentences, too many defendants may plead guilty. The reason is that the plea decision contains information about the proper sentence.

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