Deterrence versus intrinsic motivation: Experimental evidence on the determinants of corruptibility

This paper reports on an experiment of corruption that was conducted in two treatments: one with the possibility of detection and one without. It turns out that monitoring reduces corruption through deterrence; at the same time, it destroys the intrinsic motivation for honesty. Thus the net effect on overall corruption is a priori undetermined. We show that the salary level has an influence on corruption through increased opportunity costs of corruption, but fail to find evidence for a ‘payment satisfaction’ effect. Interesting policy conclusions emerge. RID="*" ID="*" Acknowledgments: We are indebted to Johann Graf Lambsdorff for calling our attention to Fujimori's gender policy and to Ernst Fehr, Bruno Frey, Alireza Jay Naghavi, and two anonymous referees for valuable comments.