Corruption and Within-Country Stereotypes

Abstract

We conduct a hybrid experimental-observational study on college students to investigate whether the exposure to institutions of significantly heterogeneous quality affects their behavior and their stereotypes about others' behavior in a corruption experiment. The 2x2 between-subject experimental design varies:

(i) the availability of information on the geographic origin of the participants; and

(ii) whether participants are matched with others from the same macro-region.

Experimental results show that:

(i) knowing the other’s region of origin significantly increases the probability of engaging in corruption, but mostly when briber and bribee belong to different macro-regions;

(ii) coming from municipalities with a lower contemporary and historical level of civic capital significantly increases the probability of engaging in corruption.

Our findings suggest that the quality of institutions has a persistent effect on an individuals' internalized prosocial norms, and that these effects are evident even in a highly controlled laboratory setting.

Keywords: Corruption, Institutions, Social Capital, Diversity

JEL Classification: A14, C91, D73, Z13