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Corruption in Hierarchies

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  • Juan D. Carrillo

Abstract

We study the efficiency of measures to fight bribery in a three-tier organization when corruption can propagate within the hierarchy and officials privately know their propensity for corruption. We show that if the organization relies on internal labor markets or superiors choose the effort exerted in monitoring, then increasing wages and stiffening supervision may have perverse effects in the incentives of officials to act honestly, and therefore end up increasing the overall level of bribery.

Suggested Citation

  • Juan D. Carrillo, 2000. "Corruption in Hierarchies," Annals of Economics and Statistics, GENES, issue 59, pages 37-61.
    • Handle: RePEc:adr:anecst:y:2000:i:59:p:37-61
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    File URL: http://www.jstor.org/stable/20076241
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    Citations

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    Cited by:

    1. Guillaume Roger & Luís Vasconcelos, 2014. "Platform Pricing Structure and Moral Hazard," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 527-547, September.
    2. Nicolas Jacquemet, 2005. "La corruption comme une imbrication de contrats : Une revue de la littérature microéconomique," Working Papers 2005-29, Center for Research in Economics and Statistics.
    3. Makowsky, Michael D. & Wang, Siyu, 2018. "Embezzlement, whistleblowing, and organizational architecture: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 58-75.
    4. Anton Granik & Francesco Saraceno, 2012. "Institutions and growth : a simplified theory of decentralization and corruption," SciencePo Working papers Main hal-03461200, HAL.
    5. repec:hal:wpspec:info:hdl:2441/53r60a8s3kup1vc9k2cag6dp8 is not listed on IDEAS
    6. Peiyao Shen & Regina Betz & Andreas Ortmann & Rukai Gong, 2020. "Improving Truthful Reporting of Polluting Firms by Rotating Inspectors: Experimental Evidence from a Bribery Game," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 201-233, July.
    7. Anton Granik & Francesco Saraceno, 2012. "Institutions and growth : a simplified theory of decentralization and corruption," Working Papers hal-03461200, HAL.
    8. Anwar Shah, 2006. "Corruption and Decentralized Public Governance," Chapters, in: Ehtisham Ahmad & Giorgio Brosio (ed.), Handbook of Fiscal Federalism, chapter 19, Edward Elgar Publishing.
    9. Valerie Rosenblatt, 2012. "Hierarchies, Power Inequalities, and Organizational Corruption," Journal of Business Ethics, Springer, vol. 111(2), pages 237-251, December.
    10. Anton Granik & Francesco Saraceno, 2012. "Institutions and growth : a simplified theory of decentralization and corruption," Sciences Po publications 2012-21, Sciences Po.
    11. Xiang, Wang, 2020. "Who will watch the watchers? On optimal monitoring networks," Journal of Economic Theory, Elsevier, vol. 187(C).
    12. Cracau, Daniel & Franz, Benjamin, 2013. "Bonus payments as an anti-corruption instrument: A theoretical approach," Economics Letters, Elsevier, vol. 120(1), pages 1-4.
    13. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9k2cag6dp8 is not listed on IDEAS
    14. Fahad Khalil & Jacques Lawarrée & Sungho Yun, 2010. "Bribery versus extortion: allowing the lesser of two evils," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 179-198, March.
    15. repec:spo:wpecon:info:hdl:2441/53r60a8s3kup1vc9k2cag6dp8 is not listed on IDEAS
    16. Brocas, Isabelle & Carrillo, Juan D. & Montgomery, Mallory, 2021. "Shaming as an incentive mechanism against stealing: Behavioral and physiological evidence," Journal of Public Economics, Elsevier, vol. 194(C).
    17. repec:esx:essedp:738 is not listed on IDEAS
    18. Alexander Henke & Fahad Khalil & Jacques Lawarree, 2022. "Honest agents in a corrupt equilibrium," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 762-783, August.
    19. Brocas, Isabelle & Carrillo, Juan D., 2019. "A neuroeconomic theory of (dis) honesty," Journal of Economic Psychology, Elsevier, vol. 71(C), pages 4-12.

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