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Choosing Agents and Monitoring Consumption: A Note on Wealth as a Corruption-Controlling Device

20 Pages Posted: 19 Sep 2008  

Rafael Di Tella

Harvard Business School - Business, Government and the International Economy Unit; National Bureau of Economic Research (NBER)

Federico Weinschelbaum

University of San Andres

Multiple version iconThere are 2 versions of this paper

Date Written: 0000

Abstract

There are a large number of cases where corruption has been discovered when investigating levels of consumption that appear to be hard to justify. The informativeness of an agent's level of consumption depends on his legal income and initial level of wealth, as conspicuous consumption by wealthy agents leads to little updating of the principal's belief about their honesty. This introduces a tendency to prefer poor agents as they are easier to monitor. More generally, we describe the basic problem of choosing agents and monitoring consumption with the aim of reducing corruption, and discuss features of the practical applications.

Suggested Citation

Di Tella, Rafael and Weinschelbaum, Federico, Choosing Agents and Monitoring Consumption: A Note on Wealth as a Corruption-Controlling Device (0000). The Economic Journal, Vol. 118, Issue 532, pp. 1552-1571, October 2008. Available at SSRN: https://ssrn.com/abstract=1270281 or http://dx.doi.org/10.1111/j.1468-0297.2008.02180.x

Rafael Di Tella (Contact Author)

Harvard Business School - Business, Government and the International Economy Unit ( email )

Cambridge, MA
United States
617-495-5048 (Phone)
617-496-5985 (Fax)

HOME PAGE: http://www.people.hbs.edu/rditella/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Federico Weinschelbaum

University of San Andres ( email )

Vito Dumas 284
(1644) Victoria, Pcia
Buenos Aires
Argentina
54-11-4725-7041 (Phone)
54-11-4725-7010 (Fax)

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