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Petty Corruption: A Game-Theoretic Approach

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Author Info
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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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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Find related papers by JEL classification:
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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  1. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2009. "Strategic analysis of petty corruption with an intermediary," Review of Economic Design, Springer, vol. 13(1), pages 45-57, April. [Downloadable!] (restricted)
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This page was last updated on 2009-12-31.

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