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Small-World Networks of corruption

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  • Pablo Morales, Jorge Finke

Abstract

Collective behavior forms and spreads through social contact. This thesis introduces a framework for understanding how the structure of social ties may impact the evolution of bribery. We represent relationships as highly clustered networks with small characteristic path lengths (i.e., small-world models having “local” and “long-range” contacts). Based on a principal-agent-client formulation, our model focuses on the effects of clustering on an equilibrium of persistent bribery. Collective outcomes depend on decision-making mechanisms that rely on sensitivity functions, which capture the level of influence between local contacts. Moreover, we represent the evolution of the network as a system of differential equations and identify its region of parameters for which the equilibrium of persistent bribery is stable. Our results show that an increase in clustering tends to decrease the levels of bribery. A more sensitive response to the behavior of neighbors, on the other hand, tends to increase bribery, but only up to a certain point. Beyond this threshold, the expected level of bribery remains constant, despite variations in the structural properties of the network.

Suggested Citation

  • Pablo Morales, Jorge Finke, 2015. "Small-World Networks of corruption," Revista CIFE, Universidad Santo Tomás, August.
    • Handle: RePEc:col:000195:015170
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    File URL: http://revistas.usantotomas.edu.co/index.php/cife/article/view/3133
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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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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    corruption; local decision-making; small-world networks.;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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