Bargaining for bribes under uncertainty
AbstractA 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 InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2008-22.
Date of creation: 2008
Date of revision:
bribery; moral cost; double auction; imperfect information; multiple equilibria;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
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- Andvig, J.C. & Ove Moene, K., 1988.
"How Corruption May Corrupt,"
20/1988, Oslo University, Department of Economics.
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