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Favoritism and allocative efficiency: a game theoretic approach

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  • Farida, Moe
  • Ahmadi-Esfahani, Fredoun Z.

Abstract

This paper seeks to investigate the interaction between favoritism and allocative efficiency. The issue of whether corruption distorts allocative efficiency in a bribery game under a pre-existing environment of alleged favoritism is considered. It is demonstrated that if there is no unambiguous favoritism, observed favoritism in bribery game may disrupt allocative efficiency. A bribery game under corruption and favoritism is developed. The model and some possible equilibria are discussed. A simple numerical example from Lebanon is also presented.

Suggested Citation

  • Farida, Moe & Ahmadi-Esfahani, Fredoun Z., 2009. "Favoritism and allocative efficiency: a game theoretic approach," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48156, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare09:48156
    DOI: 10.22004/ag.econ.48156
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    References listed on IDEAS

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