Intermediaries in Corruption: An Experiment

Abstract

Intermediaries facilitate exchanges between buyers and sellers. Anecdotal evidence suggests that intermediaries are ubiquitous in corrupt activities; however, empirical evidence on their role as facilitators of corrupt transactions is scarce. This paper asks whether, besides eliminating uncertainty, intermediaries facilitate corruption by reducing the moral or psychological costs of possible bribers and bribees. We address this question using a speci…fically designed bribery lab experiment that simulates petty corruption transactions between private citizens and public officials. The experimental data con…firm that intermediaries lower the moral costs of citizens and officials and, thus, increase corruption. Our results have implications with respect to possible anti-corruption policies targeting the legitimacy of the use of intermediaries for the provision of public services.

Keywords: Corruption, Intermediaries, Uncertainty, Moral cost, Experiment

JEL Classification: C91, D73, Z19