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Public beliefs and corruption in a repeated psychological game

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  • Balafoutas, Loukas

Abstract

This paper investigates the role of guilt aversion for corruption in public administration. Corruption is modeled as the outcome of a game played between a bureaucrat, a lobby, and the public. There is a moral cost of corruption for the bureaucrat, who is averse to letting the public down. We study how the behavior of the lobby and the bureaucrat depend on perceived public beliefs, when these are constant and when they are allowed to vary over time. With time-varying beliefs, corruption is more likely when the horizon of the game is relatively long and when public beliefs are initially low and are updated fast.

Suggested Citation

  • Balafoutas, Loukas, 2011. "Public beliefs and corruption in a repeated psychological game," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 51-59.
  • Handle: RePEc:eee:jeborg:v:78:y:2011:i:1:p:51-59 DOI: 10.1016/j.jebo.2010.12.007
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    Cited by:

    1. Ye-Feng Chen & Shu-Guang Jiang & Marie Claire Villeval, 2015. "The Tragedy of Corruption. Corruption as a social dilemma," Working Papers 1531, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Chen, Yefeng & Jiang, Shuguang & Villeval, Marie Claire, 2016. "The Tragedy of Corruption," IZA Discussion Papers 10175, Institute for the Study of Labor (IZA).
    3. repec:spr:jesaex:v:3:y:2017:i:2:d:10.1007_s40881-017-0043-0 is not listed on IDEAS
    4. Loukas Balafoutas & Helena Fornwagner, 2016. "The limits of guilt," Working Papers 2016-09, Faculty of Economics and Statistics, University of Innsbruck.
    5. Daniel Gingerich & Virginia Oliveros & Ana Corbacho & Mauricio Ruiz-Vega, 2015. "Corruption as a Self-Fulfilling Prophecy: Evidence from a Survey Experiment in Costa Rica," IDB Publications (Working Papers) 88334, Inter-American Development Bank.

    More about this item

    Keywords

    Psychological games; Corruption; Bureaucracy; Guilt aversion;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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