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Petty Corruption: A Game-Theoretic Approach

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  • Lambert-Mogiliansky, Ariane

    (Paris School of Economics)

  • Majudar, Mukul

    (Cornell University)

  • Radner, Roy

    (New York University)

Abstract

The paper explores a game-theoretic model of petty corruption involving a sequence of entrepreneurs and a track of bureaucrats. Each entrepreneur's project is approved if and only if it is cleared by each bureaucrat. The project value is stochastic; its value is observed only by the entrepreneur, but its distribution is common knowledge. Each bureaucrat clears the project only if a bribe is paid. The bribe for qualified projects ("extortion") and unqualified projects ("capture") may differ. We identify the nature and welfare implications of different types of equilibria under appropriate technical assumptions on the structure of the game.

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Bibliographic Info

Paper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number 08-09.

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Date of creation: Dec 2008
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Handle: RePEc:ecl:corcae:08-09

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Cited by:
  1. Ariane Lambert-Mogiliansky & Mukul Majumdar & Radner Roy, 2007. "Strategic analysis of petty corruption with an intermediary," PSE Working Papers halshs-00587715, HAL.
  2. Drugov, Mikhail, 2010. "Competition in bureaucracy and corruption," Journal of Development Economics, Elsevier, vol. 92(2), pages 107-114, July.
  3. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2005. "Strategic analysis of petty corruption: Entrepreneurs and bureaucrats," PSE Working Papers halshs-00590706, HAL.
  4. Seung Yoo, 2008. "Petty corruption," Economic Theory, Springer, vol. 37(2), pages 267-280, November.
  5. Krishna Athreya & Monisankar Bishnu, 2010. "On the efficiency of ‘single window’," Economic Theory, Springer, vol. 43(2), pages 207-226, May.

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