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Bonus payments as an anti-corruption instrument: A theoretical approach

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  • Cracau, Daniel
  • Franz, Benjamin

Abstract

We analyse bonus payments for officials, who transfer payments truthfully to the government rather than collecting bribes. We show that optimised bonus payments are always beneficial to the government, making them a more effective anti-corruption measure than simple wage increases.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 120 (2013)
Issue (Month): 1 ()
Pages: 1-4

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Handle: RePEc:eee:ecolet:v:120:y:2013:i:1:p:1-4

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Corruption; Principal–agent game; Monetary incentives;

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References

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  1. HINDRIKS, Jean & KEEN, Michael & MUTHOO, Abhinay, . "Corruption, extortion and evasion," CORE Discussion Papers RP -1671, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  3. Kahn, Charles M & Silva, Emilson C D & Ziliak, James P, 2001. "Performance-Based Wages in Tax Collection: The Brazilian Tax Collection Reform and Its Effects," Economic Journal, Royal Economic Society, vol. 111(468), pages 188-205, January.
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  5. Banerjee, Abhijit V, 1997. "A Theory of Misgovernance," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1289-1332, November.
  6. Vollaard, B.A. & Ours, J.C. van, 2010. "Does Regulation of Built-in Security Reduce Crime? Evidence from a Natural Experiment," Discussion Paper 2010-019, Tilburg University, Tilburg Law and Economic Center.
  7. Juan D. CARRILLO, 2000. "Corruption in Hierarchies," Annales d'Economie et de Statistique, ENSAE, issue 59, pages 37-61.
  8. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
  9. Emilson C. D. Silva & Charles M. Kahn & Xie Zhu, 2007. "Crime and Punishment and Corruption: Who Needs "Untouchables?"," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(1), pages 69-87, 02.
  10. Bengt Holmstrom, 1997. "Moral Hazard and Observability," Levine's Working Paper Archive 1205, David K. Levine.
  11. Bardhan, Pranab, 2006. "The economist's approach to the problem of corruption," World Development, Elsevier, vol. 34(2), pages 341-348, February.
  12. Guriev, Sergei, 2003. "Red Tape and Corruption," CEPR Discussion Papers 3972, C.E.P.R. Discussion Papers.
  13. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  14. Jens Chr. Andvig & Odd-Helge Fjeldstad, 2008. "Crime, Poverty and Police Corruption in Developing Countries," CMI Working Papers 7, CMI (Chr. Michelsen Institute), Bergen, Norway.
  15. Andvig, J.C. & Ove Moene, K., 1988. "How Corruption May Corrupt," Memorandum 20/1988, Oslo University, Department of Economics.
  16. Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
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