Why didn't they....? *SPOILERS*
Why wouldn't they simply tell him straight up what was going on instead of the complicated and elaborate idea of brainwashing him into thinking he was insane? You're on death row, you're being executed, only to wake up in Oregon where people tell you you're the new caretaker of a hospital. Of course he would go looking for answers. Anyone would. What were they thinking? He is under the impression that he somehow now is a free person, so there's really nothing stopping him from making contact with his family or even try to go back to Texas. Why would he not? That's the first thing anyone would have done.
Wouldn't it have been far more effective to just tell him "Look, you're part of a secret experiment. As you can tell, you were never executed. You were brought here to get a so called second chance. We will be monitoring you around the clock with hidden cameras and microphones. We will have people watching you. You will never know who they are or where they are. You will be living is this cabin and work as a caretaker. If you attempt to leave this town or make contact with your family we will kill you. Everyone already think you are dead. So you can either accept this new life and make the best of it or die for real this time"??!
That way he would know why people around him sometimes act strange and appear to watch him. He wouldn't try to escape or frantically try to figure out what happened to him. At least he would understand that they wouldn't let him leave if he try. He wouldn't be shocked to find hidden cameras in his cabin. Maybe he would even find some peace and comfort eventually in getting a second chance. It would sort of be like a mental prison for him, but at least extremely much better than actually being in prison.
This whole thing with trying to erase his memories with implants and convincing him that he's crazy is actually just silly. It made an ok movie, I liked it. But the concept is stupid. Let's say the experiment worked according to the plan and he adapted to his new life. Let's say he wants to quit his "job" and starts working as a bartender down town instead. Or let's say he decides to move to Florida to open a cupcake bakery? Would that still be considered a project failure, and they'd lock him up?