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How Do Intermediaries Affect the Effectiveness of the Four-Eyes-Principle? An Experimental Investigation

Author

Listed:
  • Fan Liangcong

    (Zhejiang University, Guanghua Law School, 51 Zhijiang Road, 310008Hangzhou, China)

  • Ying Zechun

    (College of Economics, Zhejiang University, 310027Hangzhou, China)

  • Yuan Yuemei

    (College of Economics, Zhejiang University, 310027Hangzhou, China)

  • Zhang Xinchao

    (Industrial & Commercial Bank of China, Jinan Branch, 250011Jinan, China)

  • Xu Bin

    (College of Economics, Zhejiang Gongshang University, 310018Hangzhou, China)

Abstract

Corrupt deals are commonly arranged by intermediaries. However, attempts to deter corruption pay little attention to the role of intermediaries in corrupt deals. This paper reports a laboratory bribery experiment on corruption designed to investigate how intermediaries with information about the lowest bribe that the official is willing to accept in a briber-initiated corrupt deal affect the effectiveness of the four-eyes-principle (FEP) on deterring corruption. We find that the introduction of the FEP significantly decreases the corruption level by increasing uncertainty. However, the presence of intermediaries with information completely offsets the positive effect of introducing the FEP on preventing corruption. Our findings suggest that further research on corruption should allow a more active role of intermediaries, and legislators should take the role of intermediaries into account when designing anti-corruption mechanisms.

Suggested Citation

  • Fan Liangcong & Ying Zechun & Yuan Yuemei & Zhang Xinchao & Xu Bin, 2019. "How Do Intermediaries Affect the Effectiveness of the Four-Eyes-Principle? An Experimental Investigation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-13, October.
    • Handle: RePEc:bpj:bejeap:v:19:y:2019:i:4:p:13:n:10
    DOI: 10.1515/bejeap-2019-0059
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    References listed on IDEAS

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    1. Ariane Lambert-Mogiliansky & Mukul Majumdar & Roy Radner, 2009. "Strategic analysis of petty corruption with an intermediary," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 45-57, April.
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    4. Schickora, Jan Theodor, 2011. "Bringing the Four-Eyes-Principle to the Lab," Discussion Papers in Economics 12160, University of Munich, Department of Economics.
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    6. Frank Björn & Li Sha & Bühren Christoph & Qin Haiying, 2015. "Group Decision Making in a Corruption Experiment: China and Germany Compared," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(2), pages 207-227, April.
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    Cited by:

    1. Hu, Lin & Oak, Mandar, 2023. "Intermediated corruption under asymmetric punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 490-499.
    2. Ning Wang & Can Wang & Limin Hou & Bing Fang, 2021. "Investigating Young Employee Stressors in Contemporary Society Based on User-Generated Contents," IJERPH, MDPI, vol. 18(24), pages 1-19, December.

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    More about this item

    Keywords

    intermediary; bribery experiment; the four-eyes-principle;
    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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