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Bribery and Public Procurement - An Experimental Study

  • Susanne Büchner

    ()

    (Max-Planck-Institute for Economics)

  • Andreas Freytag

    ()

    (University of Jena, Faculty of Economics)

  • Luis G. Gonzalez

    ()

  • Werner Güth

    ()

    (Max-Planck-Institute for Economics)

A procurement contract is granted by a bureaucrat (the auctioneer) who is interested in a low price and a bribe from the provider. The optimal bids and bribes are derived based on an iid private cost assumption. In the experiment, bribes are negatively framed (betweensubjects treatment) to capture that society is better off if bribes are rare or low. Although bids are lower than predicted, behavior is qualitatively in line with the linear equilibrium prediction. When bribes generate a negative externality, there is a significant increase in the variability of the data.

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File URL: http://www.wiwi.uni-jena.de/Papers/wp-sw0606.pdf
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Paper provided by Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät in its series Jenaer Schriften zur Wirtschaftswissenschaft with number 06/2006.

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Date of creation: 15 Jan 2006
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Handle: RePEc:jen:jenasw:2006-06
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  1. Marco Celentani & Juan J. Ganuza, 2000. "Corruption and competition in procurement," Economics Working Papers 464, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2001.
  2. Lengwiler, Yvan & Wolfstetter, Elmar, 2000. "Auctions and corruption," SFB 373 Discussion Papers 2000,40, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  3. Gökhan R. Karahan & Laura Razzolini & William F. Shughart II, 2002. "Centralized versus decentralized decision-making in a county government setting," Economics of Governance, Springer, vol. 3(2), pages 101-115, 07.
  4. Lien, Da-Hsiang Donald, 1986. "A note on competitive bribery games," Economics Letters, Elsevier, vol. 22(4), pages 337-341.
  5. Mark Duggan & Steven D. Levitt, 2000. "Winning Isn't Everything: Corruption in Sumo Wrestling," NBER Working Papers 7798, National Bureau of Economic Research, Inc.
  6. Klaus Abbink, 2006. "Laboratory experiments on corruption," Monash Economics Working Papers archive-38, Monash University, Department of Economics.
  7. Beck, Paul J. & Maher, Michael W., 1986. "A comparison of bribery and bidding in thin markets," Economics Letters, Elsevier, vol. 20(1), pages 1-5.
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