Group Monitoring and Inter-Period Endogenous Crackdown in Anti-Corruption

Abstract

We explore the effectiveness of an anti-corruption mechanism that combines both the merits of the top-down institutions and the bottom-up monitoring from the masses. Based on a repeated stranger matching harassment bribe game, we introduce a group monitoring mechanism that participants in the role of citizens can pay a fixed cost to monitor. The corrupt officials’ probability of being punished increases with the number of citizens who choose to pay and a crackdown is triggered when the group monitor reaches a threshold. We further introduce an additional inter-period endogenous crackdown mechanism that a high proportion of monitors in the current period will automatically trigger a crackdown on corrupt officials in the next period. We find citizens’ decisions to monitor are largely driven by officials’ harassment. Though citizens face the social dilemma of anti-corruption, a high proportion of citizens paid to monitor, and this significantly decreases the officials’ bribe demand. The additional inter-period crackdown mechanism seems partly crowd out citizens’ intrinsic motivation to fight against harassment but improves the efficiency of citizens’ anti-corruption outcomes with time and works effectively in terms of results in the long run.

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