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Bargaining for bribes under uncertainty

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  • Danila Serra

Abstract

A corrupt transaction is often the result of bargaining between the parties involved. This paper models bribery as a double auction where a private citizen and a public o¢ cial strategically interact as the potential buyer and the potential seller of a corrupt service. Individuals di¤er in the internalized moral cost generated by corruption, and may have only imperfect information on others moral cost, i.e. their "corruptibility". This paper investigates the role that imperfect information with respect to the "corruptibility" of one's potential partner in corruption plays in his or her propensity to engage in bribery, and, consequently, the equilibrium level of corruption in a society. We find that corruption is lower when potential bribers and potential bribees are uncertain regarding each other's "corruptibility". This paper provides therefore theoretical support to anti-corruption strategies, such as staff rotation in public offices, aimed at decreasing the social closeness of bribers and bribees.

Suggested Citation

  • Danila Serra, 2008. "Bargaining for bribes under uncertainty," CSAE Working Paper Series 2008-22, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:2008-22
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    File URL: http://www.csae.ox.ac.uk/materials/papers/2008-22text.pdf
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    References listed on IDEAS

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    1. Andvig, Jens Chr. & Moene, Karl Ove, 1990. "How corruption may corrupt," Journal of Economic Behavior & Organization, Elsevier, vol. 13(1), pages 63-76, January.
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    Cited by:

    1. Mao, Liang & Zhang, Tianyu, 2017. "A minimal sufficient set of procedures in a bargaining model," Economics Letters, Elsevier, vol. 152(C), pages 79-82.
    2. Zambrano, Eduardo, 2016. "‘Vintage’ Nash bargaining without convexity," Economics Letters, Elsevier, vol. 141(C), pages 32-34.
    3. Laslier, Jean-François & Núñez, Matías & Pimienta, Carlos, 2017. "Reaching consensus through approval bargaining," Games and Economic Behavior, Elsevier, vol. 104(C), pages 241-251.
    4. Basak, Debasmita, 2017. "Cournot vs. Bertrand under centralised bargaining," Economics Letters, Elsevier, vol. 154(C), pages 124-127.

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    More about this item

    Keywords

    bribery; moral cost; double auction; imperfect information; multiple equilibria;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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