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Petty Corruption: A Game-Theoretic Approach

Author

Listed:
  • Lambert-Mogiliansky, Ariane

    (Paris School of Economics)

  • Majudar, Mukul

    (Cornell University)

  • Radner, Roy

    (New York University)

Abstract

The paper explores a game-theoretic model of petty corruption involving a sequence of entrepreneurs and a track of bureaucrats. Each entrepreneur's project is approved if and only if it is cleared by each bureaucrat. The project value is stochastic; its value is observed only by the entrepreneur, but its distribution is common knowledge. Each bureaucrat clears the project only if a bribe is paid. The bribe for qualified projects ("extortion") and unqualified projects ("capture") may differ. We identify the nature and welfare implications of different types of equilibria under appropriate technical assumptions on the structure of the game.

Suggested Citation

  • Lambert-Mogiliansky, Ariane & Majudar, Mukul & Radner, Roy, 2008. "Petty Corruption: A Game-Theoretic Approach," Working Papers 08-09, Cornell University, Center for Analytic Economics.
    • Handle: RePEc:ecl:corcae:08-09
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    File URL: https://cae.economics.cornell.edu/08-09.pdf
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    Citations

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    Cited by:

    1. Roberto Burguet & Juan José Ganuza & José Garcia Montalvo, 2016. "The microeconomics of corruption. A review of thirty years of research," Economics Working Papers 1525, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Krishnendu Ghosh DASTIDAR & Makoto YANO, 2017. "In many emerging economies corruption, poor quality of information and poor governance lead to restricted entry. In this paper we analyze the determinants of the .height.of entry barrier in a developing economy where established .rms often use dubiou," Discussion papers 17010, Research Institute of Economy, Trade and Industry (RIETI).
    3. Stamatios Katsikas & Vassili Kolokoltsov & Wei Yang, 2016. "Evolutionary Inspection and Corruption Games," Games, MDPI, vol. 7(4), pages 1-25, October.
    4. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2009. "Strategic analysis of petty corruption with an intermediary," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 45-57, April.
    5. Seung Yoo, 2008. "Petty corruption," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 267-280, November.
    6. Hideki Sato, 2022. "Is it reasonable to legalize tea money?," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(2), pages 267-272, October.
    7. Krishna Athreya & Monisankar Bishnu, 2010. "On the efficiency of ‘single window’," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(2), pages 207-226, May.
    8. Lambert-Mogiliansky, Ariane & Majumdar, Mukul & Radner, Roy, 2007. "Strategic analysis of petty corruption: Entrepreneurs and bureaucrats," Journal of Development Economics, Elsevier, vol. 83(2), pages 351-367, July.
    9. Drugov, Mikhail, 2010. "Competition in bureaucracy and corruption," Journal of Development Economics, Elsevier, vol. 92(2), pages 107-114, July.
    10. Perla, Abhinav & Nikolaev, Alexander & Pasiliao, Eduardo, 2018. "Workforce management under social Link Based Corruption," Omega, Elsevier, vol. 78(C), pages 222-236.
    11. Hossain, Ashrafee Tanvir & Hossain, Takdir & Kryzanowski, Lawrence, 2021. "Political corruption and corporate payouts," Journal of Banking & Finance, Elsevier, vol. 123(C).
    12. Hong, Fuhai & Yin, Zhendong, 2020. "Collusion, extortion and the government’s organizational structure," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 1-23.
    13. Dmitriy Knyazev, 2023. "How to fight corruption: Carrots and sticks," Economic Inquiry, Western Economic Association International, vol. 61(2), pages 413-429, April.
    14. Hossain, Ashrafee Tanvir & Kryzanowski, Lawrence, 2021. "Political corruption and Corporate Social Responsibility (CSR)," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    15. V. N. Kolokoltsov & O. A. Malafeyev, 2017. "Mean-Field-Game Model of Corruption," Dynamic Games and Applications, Springer, vol. 7(1), pages 34-47, March.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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