Corruption as Betrayal: Experimental Evidence on Corruption under Delegation

Abstract

We consider corruption behavior in a three-players game: Principal, Agent, Briber. We argue that when the Principal chooses a fair wage, the Agent faces conflicting interests to reciprocate. This gives rise to a delegation effect, which could undercut corruption as compared to what arises in two players settings. We set up two experiments varying in the exogeneity of the delegation relationship. The experimental evidence supports the delegation effect. This, in turn, provides further insight into the deterrence effect of wage on corruption even in the absence of detection.

Keywords: Corruption, Reciprocity, Enforcement, Efficiency Wage

JEL Classification: K49, K12, C91, C72