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An experimental study on bribes, detection probability and principal witness policy

Author

Listed:
  • Alexandra Christöfl

    (University of Graz)

  • Ulrike Leopold-Wildburger

    (University of Graz)

  • Arleta Rasmußen

    (University of Graz)

Abstract

We present the results of a laboratory bribery experiment in which two bidders compete for a contract and make offers to an employee of a firm which can be accompanied by a bribe. The employee then decides who to award the contract to. The roles of both bidders and the employee are played by subjects in the laboratory. We test whether different probabilities of a bribe being discovered influence the honesty of a contract placing. In a further treatment we investigate the effect of the possibility of cooperating with the authority (principal witness) in combination with a leniency policy in the form of a reduced fine for the all players who cooperate with the authorities. We find that the presence of a leniency policy reduces the number of bribes offered, but at the same time makes the bribes that are offered more profitable for corrupt bidders who earn more, especially under the principal witness condition.

Suggested Citation

  • Alexandra Christöfl & Ulrike Leopold-Wildburger & Arleta Rasmußen, 2017. "An experimental study on bribes, detection probability and principal witness policy," Journal of Business Economics, Springer, vol. 87(8), pages 1067-1081, November.
    • Handle: RePEc:spr:jbecon:v:87:y:2017:i:8:d:10.1007_s11573-017-0846-8
    DOI: 10.1007/s11573-017-0846-8
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    Cited by:

    1. 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.
    2. Buckenmaier, Johannes & Dimant, Eugen & Mittone, Luigi, 2020. "Effects of institutional history and leniency on collusive corruption and tax evasion," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 296-313.
    3. Benjamin Florian Siggelkow & Jan Trockel & Oliver Dieterle, 2018. "An inspection game of internal audit and the influence of whistle-blowing," Journal of Business Economics, Springer, vol. 88(7), pages 883-914, September.

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    More about this item

    Keywords

    Corruption; Contract placing; Detection probability; Principal witness; Cooperation with authorities; Leniency policy; Experimental study;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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