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Bribery and Endogenous Monitoring Effort: An Experimental Study

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  • Aaron Lowen

    (Department of Economics, Grand Valley State University, Grand Rapids, MI, USA)

  • Andrew Samuel

    (Department of Economics, Loyola University – Maryland, Baltimore, MD, USA)

Abstract

We present the findings of an experimental game of bribery based on Mookherjee and Png's model where inspectors are hired to find evidence against firm owners who have violated some regulation. Inspectors choose costly effort that determines the probability of finding evidence and allows them to fine the owner. Bribes may occur before or after the inspector has exerted effort and found evidence. Inspectors consistently demanded bribes below the Nash equilibrium prediction and exerted effort below the payoff-maximizing level. These results raise questions about the robustness of theoretical results regarding the efficiency of using bribes to motivate inspections.

Suggested Citation

  • Aaron Lowen & Andrew Samuel, 2012. "Bribery and Endogenous Monitoring Effort: An Experimental Study," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 38(3), pages 356-380.
  • Handle: RePEc:pal:easeco:v:38:y:2012:i:3:p:356-380
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    Cited by:

    1. Abbink, Klaus & Dasgupta, Utteeyo & Gangadharan, Lata & Jain, Tarun, 2014. "Letting the briber go free: An experiment on mitigating harassment bribes," Journal of Public Economics, Elsevier, vol. 111(C), pages 17-28.

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