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Bargaining for bribes under uncertainty

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  • Danila Serra
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    Abstract

    A corrupt transaction is often the result of bargaining between the parties involved. This paper models bribery as a double auction where a private citizen and a public o¢ cial strategically interact as the po- tential buyer and the potential seller of a corrupt service. Individu- als di¤er in the internalized moral cost generated by corruption, and may have only imperfect information on others.moral cost, i.e. their .corruptibility.. This paper investigates the role that imperfect infor- mation with respect to the .corruptibility.of one.s potential partner in corruption plays in his or her propensity to engage in bribery, and, consequently, the equilibrium level of corruption in a society. We .nd that corruption is lower when potential bribers and potential bribees are uncertain regarding each other.s .corruptibility.. This paper pro- vides therefore theoretical support to anti-corruption strategies, such as sta¤ rotation in public o¢ ces, aimed at decreasing the social close- ness of bribers and bribees.

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    Bibliographic Info

    Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2008-22.

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    Date of creation: 2008
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    Handle: RePEc:csa:wpaper:2008-22

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    Related research

    Keywords: bribery; moral cost; double auction; imperfect information; multiple equilibria;

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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.
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