The U.S. Department of Justice's Office of Community Oriented Policing Services (COPS) publishes a series of empirically based manuals for police. The latest, Sting Operations, describes the pros and cons of such undercover operations, and explains the various deceptive techniques and how they can be adapted to different types of crimes.
The manual's conclusion:
"Sting operations can be expensive, are demanding on personnel, and generally offer limited relief from recurring crime and disorder problems. This is not to say that they should never be used. They may be beneficial when used in concert with other police responses known to provide long-term solutions to the problem, such as a tool to collect information that will help in mounting other preventative operations. Clearly, they do provide some attractive benefits to police departments, particularly by facilitating investigation, increasing arrests, and fostering a cooperative spirit between prosecutors and police, all of which result in favorable publicity. However, you need to assess these benefits against the negative ethical and legal problems associated with sting operations, especially the finding that in some cases they increase crime, and in the long term, with some exceptions, generally do not reduce it."The 72-page manual is available online.