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Corruption, norm enforcement and cooperation

Author

Listed:
  • Justin Buffat
  • Julien Senn

Abstract

In many societies, the power to punish is granted to a centralized authority. While the punishment of free-riders has been shown to play an important role in the provision of public goods, corruption might strongly disrupt the ability of a centralized authority to foster cooperation. In this paper, we show that cooperation is reduced by 30% if the punishment authority can be bribed. Two concurrent channels lead to this result. First, low contributors use bribery as a way to tame the punishment authority. The punishment authority tends to reciprocate these bribes by assigning fewer punishment points. These low levels of punishment do not suffice to discipline the free-riders, who never raise their contributions. Second, bribery has negative spillovers on high contributors, who get discouraged and gradually decrease their contributions down to the level of low contributors. Overall, our paper highlights a potential peril of centralization: the sensitivity of the punishment authority to bribery.

Suggested Citation

  • Justin Buffat & Julien Senn, 2017. "Corruption, norm enforcement and cooperation," ECON - Working Papers 260, Department of Economics - University of Zurich, revised Jul 2018.
    • Handle: RePEc:zur:econwp:260
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    File URL: https://www.zora.uzh.ch/id/eprint/138912/7/econwp260.pdf
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    References listed on IDEAS

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    2. Fehr, Ernst & Williams, Tony, 2017. "Creating an Efficient Culture of Cooperation," IZA Discussion Papers 11131, Institute of Labor Economics (IZA).
    3. Ernst Fehr & Tony Williams, 2017. "Social norms, endogenous sorting and the culture of cooperation," ECON - Working Papers 267, Department of Economics - University of Zurich, revised Apr 2018.

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    More about this item

    Keywords

    Corruption; bribery; cooperation; public good; institutions;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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