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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

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

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References

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  1. Drugov, Mikhail, 2010. "Competition in bureaucracy and corruption," Journal of Development Economics, Elsevier, vol. 92(2), pages 107-114, July.
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Cited by:
  1. Mishra, Ajit & Samuel, Andrew, 2013. "Preemptive Bribery with Incomplete Information," Department of Economics Working Papers 37908, University of Bath, Department of Economics.
  2. Rodrigues-Neto, José A., 2014. "On corruption, bribes and the exchange of favors," Economic Modelling, Elsevier, vol. 38(C), pages 152-162.
  3. Dmitry Ryvkin & Danila Serra, 2013. "Does Competition Among Public Officials Reduce Corruption? An Experiment," Departmental Working Papers 1301, Southern Methodist University, Department of Economics.
  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.
  5. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.

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