Asymmetric Punishment as an Instrument of Corruption Control
The control of bribery is a policy objective in many developing countries. It has been argued that asymmetric punishments could reduce bribery by incentivizing whistle-blowing. This paper investigates the role played by asymmetric punishment in a s...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19705390/asymmetric-punishment-instrument-corruption-control http://hdl.handle.net/10986/18821 |
| Summary: | The control of bribery is a policy
objective in many developing countries. It has been argued
that asymmetric punishments could reduce bribery by
incentivizing whistle-blowing. This paper investigates the
role played by asymmetric punishment in a setting where
bribe size is determined by Nash bargaining, detection is
costly, and detection rates are set endogenously. First,
when detection rates are fixed, the symmetry properties of
punishment are irrelevant to bribery. Bribery disappears if
expected penalties are sufficiently high; otherwise, bribe
sizes rise as expected penalties rise. Second, when
detection rates are determined by the bribe-giver, a switch
from symmetric to asymmetric punishment either eliminates
bribery or allows it to persist with larger bribe sizes.
Furthermore, when bribery persists, multiple bribe sizes
could survive in equilibrium. The paper derives parameter
values under which each of these outcomes occurs and
discusses how these could be interpreted in the context of
existing institutions. |
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