Strategic Analysis of Petty Corruption: Entrepreneurs and Bureaucrats

25 Pages Posted: 9 Oct 2008

See all articles by Ariane Lambert-Mogiliansky

Ariane Lambert-Mogiliansky

affiliation not provided to SSRN

Mukul Majumdar

Cornell University

Roy Radner

Leonard N. Stern School of Business - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 2005

Abstract

This paper develops a game-theoretic model of "petty corruption" by government officials. Such corruption is widespread, especially (but not only) in developing and transition economies. The model goes beyond the previously published studies in the way it describes the structure of bureaucratic "tracks," and the information among the participants. Entrepreneurs apply, in sequence, to a "track" of two or more bureaucrats in a prescribed order for approval of their projects. Our first result establishes that in a one-shot situation no project ever gets approved. This result leads us to consider a repeated interaction setting. In that context we characterize in more detail the trigger-strategy equilibria that minimize the social loss due to the system of bribes, and those that maximize the expected total bribe income of the bureaucrats. The results are used to shed some light on two much advocate danti-corruption policies: the single window policy and rotation of bureaucrats.

Suggested Citation

Lambert-Mogiliansky, Ariane and Majumdar, Mukul and Radner, Roy, Strategic Analysis of Petty Corruption: Entrepreneurs and Bureaucrats (November 2005). NYU Working Paper No. 2451/14151, Available at SSRN: https://ssrn.com/abstract=1281327

Ariane Lambert-Mogiliansky (Contact Author)

affiliation not provided to SSRN

No Address Available

Mukul Majumdar

Cornell University ( email )

Ithaca, NY 14853
United States

Roy Radner

Leonard N. Stern School of Business - Department of Economics ( email )

44 West Fourth Street, 7-180
New York, NY 10012
United States

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