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Corruption

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  • Banerjee, Abhijit

    (MIT)

  • Hanna, Rema

    (Harvard University)

  • Mullainathan, Sendhil

    (Harvard University)

Abstract

In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place. Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control. This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task. We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.

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Bibliographic Info

Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp12-023.

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Date of creation: May 2012
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Handle: RePEc:ecl:harjfk:rwp12-023

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References

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Citations

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Cited by:
  1. Lee, Wang-Sheng & Guven, Cahit, 2013. "Engaging in corruption: The influence of cultural values and contagion effects at the microlevel," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 287-300.
  2. Hathroubi, Salem, 2013. "Epidemic corruption: a bio-economic homology," EconStor Preprints 73558, ZBW - German National Library of Economics.

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