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An experimental inquiry into the effect of yardstick competition on corruption

  • Angelino Viceisza

This study reports theory-testing laboratory experiments on the effect of yardstick competition on corruption. On the incumbent side, yardstick competition acts as a corruption-taming mechanism if the incumbent politician is female. On the voter side, voters focus on the difference between the tax rate in their own jurisdiction and that in another. If the tax rate is deemed unfair compared to the one in another jurisdiction, voters re-elect less. The findings support the claim by Besley and Case (1995) that incumbent behavior and tax setting are tied together through the nexus of yardstick competition. This renders generalizability to these laboratory experiments and addresses some concerns raised by Levitt and List (2007).

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File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2007-09.pdf
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Paper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2007-09.

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Length: 19
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:exc:wpaper:2007-09
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  1. Klaus Abbink, 2006. "Laboratory experiments on corruption," Monash Economics Working Papers archive-38, Monash University, Department of Economics.
  2. Brit Grosskopf & Rajiv Sarin, 2010. "Is Reputation Good or Bad? An Experiment," American Economic Review, American Economic Association, vol. 100(5), pages 2187-2204, December.
  3. Potters, J.J.M. & Rockenbach, B. & Sadrieh, A. & van Damme, E.E.C., 2003. "Collusion under Yardstick Competition : An Experimental Study," Discussion Paper 2003-97, Tilburg University, Center for Economic Research.
  4. Miller, Ross M. & Plott, Charles R., . "Product Quality Signaling in Experimental Markets," Working Papers 447, California Institute of Technology, Division of the Humanities and Social Sciences.
  5. Lockwood, Ben, 2005. "A Note on the Hybrid Equilibrium in the Besley-Smart Model," The Warwick Economics Research Paper Series (TWERPS) 727, University of Warwick, Department of Economics.
  6. Paul Belleflamme & Jean Hindriks, 2001. "Yardstick Competition and Political Agency Problems," Working Papers 441, Queen Mary University of London, School of Economics and Finance.
  7. Timothy Besley & Michael Smart, 2005. "Fiscal Restraints and Voter Welfare," STICERD - Political Economy and Public Policy Paper Series 06, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  8. Potters, J.J.M. & Sefton, M. & Vesterlund, L., 2007. "Leading-by-example and signaling in voluntary contribution games : An experimental study," Other publications TiSEM 1ea4e6c8-3071-46d8-a29f-0, Tilburg University, School of Economics and Management.
  9. Pranab Bardhan & Dilip Mookherjee, 2005. "Decentralization, Corruption and Government Accountability: An Overview," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-152, Boston University - Department of Economics.
  10. Browning, Edgar K, 1976. "The Marginal Cost of Public Funds," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 283-98, April.
  11. Vito Tanzi, 1998. "Corruption Around the World; Causes, Consequences, Scope, and Cures," IMF Working Papers 98/63, International Monetary Fund.
  12. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
  13. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  14. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  15. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages F632-F652, November.
  16. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  17. Libor Dušek & Andreas Ortman & Lubomír Lízal, 2005. "Understanding Corruption and Corruptibility Through Experiments," Prague Economic Papers, University of Economics, Prague, vol. 2005(2), pages 147-162.
  18. Smith, Vernon L, 1989. "Theory, Experiment and Economics," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 151-69, Winter.
  19. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
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