Can Transparency of Information Reduce Embezzlement? Experimental Evidence from Tanzania

Embezzlement is a major concern. By means of a sequential dictator game, we investigate theoretically and experimentally whether making information more transparent and reducing the number of intermediaries in transfer chains can reduce embezzlement. Consistent with reference-dependent preferences in terms of moral ideal, we show that the impact of transparency is conditional on the length of the transfer chain and on the position of the intermediary in the chain. Its direct effect on image encourages honesty. Its indirect effect via expectations plays in the opposite direction, motivating intermediaries to embezzle more when expecting that the following intermediary will embezzle less.

Keywords: Embezzlement, corruption, dishonesty, transparency, experiment

JEL Classification: C91, D73

Suggested Citation: Suggested Citation

Di Falco, Salvatore and Magdalou, Brice and Masclet, David and Villeval, Marie Claire and Willinger, Marc, Can Transparency of Information Reduce Embezzlement? Experimental Evidence from Tanzania (May 17, 2016). UMR 5824 WP 1618, Available at SSRN: https://ssrn.com/abstract=2780818 or http://dx.doi.org/10.2139/ssrn.2780818