Intrinsic Motivation vs. Corruption? Experimental Evidence on the Performance of Officials

Abstract

There are conflicting views as to whether corruption or intrinsic motivation plays a greater role in determining the performance of public officials. We run an experiment that incorporates both viewpoints and assess the relative strength and interplay of these respective factors. The design introduces some realism into an everyday exchange between an Estimator (businessperson) and an Auditor (public official) and induces a gray area between intrinsic motivation, extortion and bribery. The Estimator can make a large transfer in the hope of avoiding unfair treatment (extortion) or obtaining an undeserved benefit (bribery). The Auditor may be intrinsically motivated to fulfill her duty or may be corrupted by transfers. We find that intrinsic motivation has a much higher impact on the performance of Auditors than corruption. In a treatment with punishment, Auditors are significantly less likely to accept a large transfer. But punishment fails to bring about favorable welfare effects due to two forces offsetting each other on the individual level. Intrinsic motivation increases for some subjects, supporting the “expressive law” literature, while it decreases for others, supporting the “crowding-out” literature. We infer that punishing officials is an unproblematic tool for fighting corruption, but its effectiveness is called into question. Policies should focus more on preserving officials’ intrinsic motivation and worry less about their corruptibility.

Keywords: Bribery, crowding-out, expressive law, extortion, intrinsic motivation