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How corruptible are you? Bribery under uncertainty

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  • Ryvkin, Dmitry
  • Serra, Danila

Abstract

We model corruption in a society as a result of bargaining for bribes between private citizens and public officials. We investigate the role that incomplete information with respect to the intrinsic moral cost of one's potential corruption partner plays out in his or her propensity to engage in bribery, and, consequently, the equilibrium level of corruption in the society. We assume that the cost of engaging in corruption is subject to strategic complementarities, which may lead to multiple corruption equilibria. We find that corruption is lowest when potential bribers and potential bribees are uncertain regarding each other's “corruptibility” and have asymmetric bargaining powers. Our uncertainty result provides theoretical support in favor of anti-corruption strategies, such as staff rotation in public offices, aimed at decreasing the social closeness of bribers and bribees. Our bargaining power result suggests that, under uncertainty, monopolistic public good provision has the same corruption-reducing effect as competitive public good provision.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 81 (2012)
Issue (Month): 2 ()
Pages: 466-477

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:466-477

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

Related research

Keywords: Bribery; Moral cost; Bargaining model; Incomplete information; Multiple equilibria;

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References

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  1. Andvig, Jens Chr. & Moene, Karl Ove, 1990. "How corruption may corrupt," Journal of Economic Behavior & Organization, Elsevier, vol. 13(1), pages 63-76, January.
  2. Esther Hauk & Maria Sáez, 1999. "On the cultural transmission of corruption," Economics Working Papers 392, Department of Economics and Business, Universitat Pompeu Fabra.
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  4. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  5. Cadot, Olivier, 1987. "Corruption as a gamble," Journal of Public Economics, Elsevier, vol. 33(2), pages 223-244, July.
  6. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  7. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  8. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  9. Svensson, Jakob, 2002. "Who Must Pay Bribes and How Much? Evidence from a cross-section of firms," Seminar Papers 713, Stockholm University, Institute for International Economic Studies.
  10. Lui, Francis T., 1986. "A dynamic model of corruption deterrence," Journal of Public Economics, Elsevier, vol. 31(2), pages 215-236, November.
  11. Sanjeev Gupta, 1998. "Does Corruption Affect Income Inequality and Poverty?," IMF Working Papers 98/76, International Monetary Fund.
  12. Drugov, Mikhail, 2010. "Competition in bureaucracy and corruption," Journal of Development Economics, Elsevier, vol. 92(2), pages 107-114, July.
  13. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
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Citations

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Cited by:
  1. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.
  2. Dmitry Ryvkin & Danila Serra, 2013. "Does Competition Among Public Officials Reduce Corruption? An Experiment," Departmental Working Papers 1301, Southern Methodist University, Department of Economics.
  3. Rodrigues-Neto, José A., 2014. "On corruption, bribes and the exchange of favors," Economic Modelling, Elsevier, vol. 38(C), pages 152-162.
  4. Simona Fabrizi & Steffen Lippert, 2012. "Corruption and the Public Display of Wealth," Working Papers 1202, University of Otago, Department of Economics, revised Jun 2012.

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