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Corruption, norm violation and decay in social capital

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  • Banerjee, Ritwik

Abstract

The paper studies the link between corruption and social capital (measured as trust), using data from a lab experiment. Subjects play either a harassment bribery game or a strategically identical but differently framed ultimatum game, followed by a trust game. In a second experiment, we elicit social appropriateness norm of actions in the bribery game and ultimatum game treatments. Our experimental design allows us to examine whether subjects, who have been asked to pay a bribe, are less likely to trust than those in an isomorphic role in the ultimatum game. We also uncover the underlying mechanism behind any such behavioral spillover. Results suggest that a) there is a negative spillover effect of corruption on trust and the effect increases with decrease in social appropriateness norm of the bribe demand; b) lower trust in the bribery game treatment is explained by lower expected return on trust; c) surprisingly, for both the bribery and ultimatum game treatments, social appropriateness norm violation engenders the decay in trust through its adverse effect on belief about trustworthiness.

Suggested Citation

  • Banerjee, Ritwik, 2016. "Corruption, norm violation and decay in social capital," Journal of Public Economics, Elsevier, vol. 137(C), pages 14-27.
  • Handle: RePEc:eee:pubeco:v:137:y:2016:i:c:p:14-27
    DOI: 10.1016/j.jpubeco.2016.03.007
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    Cited by:

    1. Ritwik Banerjee, 2015. "On the interpretation of World Values Survey trust question - global expectations vs. local beliefs," Economics Working Papers 2015-19, Department of Economics and Business Economics, Aarhus University.
    2. Johannes Buckenmaier & Eugen Dimant & Luigi Mittone, 2016. "Tax Evasion and Institutions. An Experiment on The Role of Principal Witness Regulations," PPE Working Papers 0007, Philosophy, Politics and Economics, University of Pennsylvania.
    3. Banerjee, Ritwik & Mitra, Arnab, 2017. "On Monetary and Non-Monetary Interventions to Combat Corruption," IZA Discussion Papers 10608, Institute for the Study of Labor (IZA).
    4. Gillanders, Robert & Neselevska, Olga, 2016. "Public Sector Corruption and Trust in the Private Sector," MPRA Paper 71020, University Library of Munich, Germany.
    5. Caleb A. Cox & Brock Stoddard, 2015. "Framing and Feedback in Social Dilemmas with Partners and Strangers," Games, MDPI, Open Access Journal, vol. 6(4), pages 1-19, September.
    6. Ananish Chaudhuri & Tirnud Paichayontvijit & Erwann Sbai, 2016. "The Role of Framing, Inequity and History in a Corruption Game: Some Experimental Evidence," Games, MDPI, Open Access Journal, vol. 7(2), pages 1-24, June.

    More about this item

    Keywords

    Corruption; Social capital; Social norm; Trust games;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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