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A Theory Of Corruption

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  • Rajesh Chakrabarti

    (University of Alberta)

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    Abstract

    Most theoretical studies of corruption tend to focus on the micro models of the phenomenon studying individual acts of corruption, while the empirical papers typically study corruption at the country level. This paper builds an agent-based computational dynamic general equilibrium model of corruption. It views corruption as a risky activity with harmful macro effects. Individual choice of corruption levels lead to a societal level of corruption, which in turn, affects the risk and return of corruption at the individual level. Using simulations in a multi-generational setting with heterogeneous agents, it demonstrates that societies have locally stable equilibrium levels of corruption that depend upon a small number of socio-economic factors. It shows that under certain conditions it is possible for corruption to go on an ever-increasing trajectory till it stifles all economic activity.

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    Bibliographic Info

    Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2000 with number 269.

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    Date of creation: 05 Jul 2000
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    Handle: RePEc:sce:scecf0:269

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    Postal: CEF 2000, Departament d'Economia i Empresa, Universitat Pompeu Fabra, Ramon Trias Fargas, 25,27, 08005, Barcelona, Spain
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    Web page: http://enginy.upf.es/SCE/
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