Asymmetric Punishment as an Instrument of Corruption Control

The control of bribery is a policy objective in many developing countries. It has been argued that asymmetric punishments could reduce bribery by incentivizing whistle‐blowing. This paper investigates the role played by asymmetric punishment in a setting where bribe size is determined by Nash bargaining, detection is costly, and detection rates are set endogenously. First, if whistle‐blowing is infeasible, the symmetry properties of punishment are irrelevant to bribery deterrence but not to bribe size. Bribery disappears if expected penalties are sufficiently high; otherwise, bribe sizes rise as expected penalties rise. Second, when the bribe‐giver may whistle‐blow, a switch from symmetric to asymmetric punishment eliminates bribery only if whistle‐blowing is cheap and the stakes are low. When bribery persists, multiple bribe sizes could survive in equilibrium. The paper derives parameter values under which each of these outcomes occurs, and discusses implications for welfare and the design of policy.     

Love conditionally: The ownership structure and bribery behavior of Chinese firms

This paper studies empirically the determinants of firm bribery activities from the perspective of ownership structure. Using data on Chinese firms obtained from the Enterprise Surveys conducted by the World Bank, we compare the bribery activities of firms with various forms of ownership. We find that compared with private and foreign firms, state‐owned firms in China are not only more likely to receive bribe requests from government officials, but are also more likely to pay bribes. Meanwhile, firms are more likely to bribe if they are extorted, or if they expect to reduce infrastructural obstacles to their business operations. Other factors such as manager experience and external audits also exhibit significant influence upon firms’ bribery decisions.     

Are corruption and taxation really harmful to growth? Firm level evidence

Exploiting a unique data set containing information on the estimated bribe payments of Ugandan firms, we study the relationship between bribery payments, taxes and firm growth. Using industry-location averages to circumvent potential problems of endogeneity and measurement errors, we find that both the rate of taxation and bribery are negatively correlated with firm growth. A one-percentage point increase in the bribery rate is associated with a reduction in firm growth of three percentage points, an effect that is about three times greater than that of taxation. This provides some validation for firm-level theories of corruption which posit that corruption retards the development process to an even greater extent than taxation.     

How corruption hits people when they are down

Using Peruvian data, I show that victims of misfortune, particularly crime victims, are much more likely than non-victims to bribe public officials. Misfortune increases victims' demand for public services, raising bribery indirectly, and also increases victims' propensity to bribe certain officials conditional on using them, possibly because victims are desperate, vulnerable, or demanding services particularly prone to corruption. The effect is strongest for bribery of the police, where the increase in bribery comes principally through increased use of the police. For the judiciary the effect is also strong, and for some misfortunes is composed equally of an increase in use and an increase in bribery conditional on use. The expense and disutility of bribing thus compound the misery brought by misfortune.     

How corruption hits people when they are down

Using Peruvian data, I show that victims of misfortune, particularly crime victims, are much more likely than non-victims to bribe public officials. Misfortune increases victims' demand for public services, raising bribery indirectly, and also increases victims' propensity to bribe certain officials conditional on using them, possibly because victims are desperate, vulnerable, or demanding services particularly prone to corruption. The effect is strongest for bribery of the police, where the increase in bribery comes principally through increased use of the police. For the judiciary the effect is also strong, and for some misfortunes is composed equally of an increase in use and an increase in bribery conditional on use. The expense and disutility of bribing thus compound the misery brought by misfortune.     

The effects of externalities and framing on bribery in a petty corruption experiment

Using a simple one-shot bribery game simulating petty corruption exchanges, we find evidence of a negative externality effect and a framing effect. When the losses suffered by third parties due to a bribe being offered and accepted are high and the game is presented as a petty corruption scenario instead of in abstract terms bribes are less likely to be offered. Higher negative externalities are also associated with less bribe acceptance. However, framing has no effect on bribe acceptance, indicating that the issue of artificiality may be of particular importance in bribery experiments.     

Economics of public good provision: auditing, outsourcing, and bribery

Abstract .  This study investigates a government's contracting decision to audit or outsource the provision of a public good given a potential hidden bribe and information asymmetries. The key findings are the following. First, the bribe and price of the public good are increasing in the corruptibility of the department. Second, the bribe is decreasing in the firm's bargaining power. Third, a bribery equilibrium exists when the department's corruptibility is sufficiently high given the firm's bargaining power. A bribe involves extortion or a compensatory payment depending on the department's corruptibility. Only a compensatory bribe affects the department's contracting decision.     

Procurement auctions with ex-ante endogenous bribery

Corruption is a prevalent phenomenon in various procurement auctions. This paper explores a pattern of bribery between an auctioneer and a favored bidder, and also investigates the regulation scheme of buyer. In the model, the favored bidder is allowed to submit two bids simultaneously with the advantageous one to be announced; auctioneer decides the share of the difference between two bids which is the bribe transfer. The analysis shows that, the favored bidder does not participate in the corruption if his cost exceeds a threshold; otherwise he submits two bids whose difference is decreasing in the share. The corruption benefits both the auctioneer and the favored bidder but harms other bidders. The bribery endogenously leads to allocation inefficiency with a probability decreasing in the bribe share. Specifically, with two uniformly distributed bidders, we examine how the auctioneer optimizes the bribe share and how the buyer regulates the corruption. We find that, by driving the auctioneer to charge a higher bribe share that is less attractive for the favored bidder, severer regulation tends to reduce the probability of corruption. A buyer who adopts extremely severe regulation can exclude the corruption and achieve maximum social welfare, while a buyer who aims to maximize his own profit should tolerate some degree of the corruption.     

Letting third parties who suffer from petty corruption talk: Evidence from a collusive bribery experiment

Following a recommendation by Transparency International, we conduct a laboratory experiment to gauge the impact of a specific type of grassroots participation on petty corruption. Participants play a one-shot, three-person sequential bribery game that, depending on the treatment, either gives or does not give passive third parties suffering from corruption the opportunity to send a publicly visible message to potential bribers and bribees. We find that messaging opportunities deter bribe offers (i.e., the extensive margin of bribe), but affect neither the size of the offered bribe (i.e., the intensive margin) nor bribe acceptances. We conjecture that the different impact of the treatment on bribe-givers and bribe-takers may be due to the order of play.     

商业贿赂成因与治理的经济学分析

垄断为商业贿赂的产生和蔓延创造了条件,特别是供求失衡和信息不对称的存在为经营者进行商业贿赂带来了动力。虽然我国近年来更加重视和加强了对商业贿赂的治理,但在成本约束和信息不对称的作用下,单纯依靠政府的监管来治理商业贿赂成本高昂且效果有限。所以要想有效治理商业贿赂,我们就要从商业贿赂的成因出发,瓦解其滋生的环境,在加强政府监管的同时进一步完善法律规制,并借助全社会力量构筑全方位的商业贿赂治理体系。     

ON THE DETERMINANTS OF EDUCATIONAL CORRUPTION: THE CASE OF UKRAINE

This article utilizes a unique data set to examine the relationship between a group of potential explanatory variables and educational corruption in Ukraine. Our corruption controls include bribing on exams, on term papers, for credit, and for university admission. We use a robust nonparametric approach in order to estimate the probability of bribing across the four different categories. This approach is shown to be robust to a variety of different types of endogeneity often encountered under commonly assumed parametric specifications. Our main findings indicate that corruption perceptions, past bribing behavior, and the perceived criminality of bribery are significant factors for all four categories of bribery. From a policy perspective, we argue that when bribe control enforcement is difficult, anti‐corruption education programs targeting social perceptions of corruption could be appropriate. (JEL K42, J16, C14)     

Bribery,inefficiency, and bureaucratic delay

We examine bribery in a dynamic setting with a partially honest bureaucracy. The presence of honest officials lowers the bribe that a corrupt official can extract from efficient applicants. Consequently, efficient applicants may face delays in receiving licenses, or may never receive licenses, as inefficient applicants are serviced ahead of them. An increase in the proportion of honest officials, while directly increasing the incidence of socially optimal decisions, can also induce greater inefficiencies (misallocation and delay) from corrupt officials. As a result, social welfare may be non-monotonic in the proportion of honest officials, and small differences in monitoring costs may lead to very different levels of corruption. Competition between officials can hurt efficiency; its desirability depends on the prevalence of applicants' ability to pay bribes.     

Political decentralization and corruption: Evidence from around the world

How does political decentralization affect the frequency and costliness of bribe extraction by corrupt officials? Previous empirical studies, using subjective indexes of perceived corruption and mostly fiscal indicators of decentralization, have suggested conflicting conclusions. In search of more precise findings, we combine and explore two new data sources—an original cross-national data set on particular types of decentralization and the results of a firm level survey conducted in 80 countries about firms' concrete experiences with bribery. In countries with a larger number of government or administrative tiers and (given local revenues) a larger number of local public employees, reported bribery was more frequent. When local—or central—governments received a larger share of GDP in revenue, bribery was less frequent. Overall, the results suggest the danger of uncoordinated rent-seeking as government structures become more complex.     

On corruption,bribes and the exchange of favors

This paper investigates how the availability of alternative forms of bribe payments, on top of money, may facilitate corruption. There are two bribe payment technologies and a Corruptor and a Receiver must agree on the value and on the technology of the bribe. The paper infers which form of payment can be used by analyzing probabilities of punishment, bargaining powers of agents, and relative efficiency of the two different technologies. By assumption, monetary payments have distinct efficiency than do non-monetary favors. If the Receiver has a sufficiently high utility for payments using a particular technology, then only bribes paid via this technology are feasible. There is also a range of intermediate cases where monetary bribery is used if and only if the relative bargaining power of the Receiver is sufficiently large compared to that of the Corruptor.     

Former Communist party membership and bribery in the post-socialist countries

We study the effect of former Communist party membership on paying bribes to public officials and motivations for bribery, 25 years after the fall of communist rule. Data come from a large representative survey, conducted in post-socialist countries in 2015/16. To deal with endogeneity, we instrument party membership with information on whether family members were affected by the Second World War. Instrumental variable results suggest that links to the former Communist party increase the likelihood of paying bribes today; this result applies to the former party members as well as their children and relatives. Among bribe payers, people with the party links are more likely to offer bribes as well as think that bribe payments are expected. Overall, our findings suggest that the proclivity to corruption of the former Communist party members has been transmitted through family and thus sustained over time, contributing to corruption decades after the demise of the Socialist bloc.     

On the interpretation of bribery in a laboratory corruption game: moral frames and social norms

Past studies on laboratory corruption games have not been able to find consistent evidence that subjects make “immoral” decisions. A possible reason, and also a critique of laboratory corruption games, is that the experiment may fail to trigger the intended immorality frame in the minds of the participants, leading many to question the very raison d’être of laboratory corruption games. To test this idea, we compare behavior in a harassment bribery game with a strategically identical but neutrally framed ultimatum game. The results show that fewer people, both as briber and bribee, engage in corruption in the bribery frame than in the alternative and the average bribe amount is lesser in the former than in the latter. These suggest that moral costs are indeed at work. A third treatment, which relabels the bribery game in neutral language, indicates that the observed treatment effect arises not from the neutral language of the ultimatum game but from a change in the sense of entitlement between the bribery and ultimatum game frames. To provide further support that the bribery game does measure moral costs, we elicit the shared perceptions of appropriateness of the actions or social norm, under the two frames. We show that the social norm governing the bribery game frame and ultimatum game frame are indeed different and that the perceived sense of social appropriateness plays a crucial role in determining the actual behavior in the two frames. Furthermore, merely relabelling the bribery game in neutral language makes no difference to the social appropriateness norm governing it. This indicates that, just as in the case of actual behavior, the observed difference in social appropriateness norm between bribery game and ultimatum game comes from the difference in entitlement too. Finally, we comment on the external validity of behavior in lab corruption games.     

Corruption and the Provision of Public Output in a Hierarchical Asymmetric Information Relationship

This paper develops a principal‐agent model to explore the interaction of corruption, bribery, and political oversight of production. Under full information, an honest politician achieves the first best while a dishonest politician creates shortages and bribes. Under asymmetric information, an honest politician may create more shortages relative to a dishonest one, but the latter creates more bribes. The model identifies a tradeoff between bribery and efficiency. This helps to reconcile some conflicting results on the implications of corruption for the size of the public sector. It also provides new results on the circumstances under which an improvement in the auditing technology is beneficial. The paper identifies conditions under which corruption is welfare enhancing. However, the paper also shows that under precisely these conditions private provision, even by an unregulated monopolist, would be better than public provision.     

Corruption: The good,the bad,and the uncertain

This paper argues that the relationship between corruption and economic growth is dependent upon the uncertainty involved. Employing data on a cross‐section of countries, this paper uses an interaction between the frequency of bribery payments and the uncertainty regarding the delivery of the service in exchange for these bribes to show that corruption has a negative association with growth unless the uncertainty is minimal. Furthermore, the negative association becomes larger in magnitude with higher levels of uncertainty. At extremely high levels of uncertainty a relatively small increase in corruption, equivalent to moving from Sweden to the United States for example, is associated with economically large decreases in economic growth.     

Delegating decision rights for anticipated rewards as an alternative to corruption: An experiment

We study experimentally whether anti-corruption policies with a focus on bribery might be insufficient to uncover more subtle ways of gaining an unfair advantage. In particular, we investigate whether an implicit agreement to exchange favors between a decision-maker and a lobbying party serves as a legal substitute for corruption. We find that even the pure anticipation of future rewards from a lobbying party suffices to bias a decision-maker in favor of this party, even though it creates negative externalities to others. Although future rewards are not contractible, the benefitting party voluntarily compensates decision-makers for partisan choices. In this way, both earn more at the expense of others. Thus, the outcome mirrors what might have been achieved via conventional bribing, while not being illegal.     

Corruption and culture: An experimental analysis

Why do some people choose corruption over honesty and others not? Do the social norms and values prevailing in the societies in which they grew up affect their decisions? In 2005, we conducted a bribery experiment and found that, among undergraduates, we could predict who would act corruptly with reference to the level of corruption in their home country. Among graduate students we could not. In 2007, we replicated our result and also found that time spent in the UK was associated with a decline in the propensity to bribe, although this does not explain our inability to predict graduate behaviour. We conclude that, while corruption may, in part, be a cultural phenomenon, individuals should not be prejudged with reference to their country of origin.