Group Monitoring, Endogenous Crackdown and Anti-corruption: An Experiment

Abstract

We explore the effectiveness of an anti-corruption mechanism that combines the top-down institutions and the bottom-up monitoring from the masses. Based on a repeated stranger matching harassment bribe game, we introduce the interventions of the group monitoring and the endogenous crackdown. With the group monitoring, participants in the role of citizens can pay a fixed cost to monitor, while the corrupt officials’ probability of being punished increases with the number of citizens who choose to pay. With the endogenous crackdown, the probability of punishing corrupt officials increases to 50% automatically in the next period if more than 60% of citizens choose to monitor in the current period. Though citizens face the social dilemma of anti-corruption, a high proportion of citizens paid to monitor, and this significantly decreases the officials’ bribe demanding. The endogenous crackdown mechanism further increases the monitoring of citizens and decreases the bribe demanding of officials.

Keywords: corruption, harassment bribe, group monitoring, endogenous crackdown, experiment

JEL Classification: C92; D73; K42