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A Game-Theoretic Analysis of Corruption in Bureaucracies

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  • Ms. Era Dabla-Norris

Abstract

This paper examines interactions between self-interested agents in a two-tier government hierarchy, consisting of a central authority and bureaucrats in a two-stage game, where the actions of agents affect private sector allocations. Conditions under which lower-tier corruption arises as an equilibrium characterization of the game are identified. If bureaucratic corruption sufficiently reduces the tax base, policies that deter corruption may be optimal. When monitoring is expensive or ineffective, lower-level corruption arises as equilibrium. Tax farming and the sale of offices can occur in these equilibria. In addition, strategic complementarities between bureaucrats may give rise to multiple equilibria.

Suggested Citation

  • Ms. Era Dabla-Norris, 2000. "A Game-Theoretic Analysis of Corruption in Bureaucracies," IMF Working Papers 2000/106, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2000/106
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    Citations

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    Cited by:

    1. Hokky Situngkir, 2004. "Money-Scape: A Generic Agent-Based Model of Corruption," Computational Economics 0405008, University Library of Munich, Germany.
    2. Daniel Kaufmann & Gil Mehrez & Tugrul Gurgur, 2019. "Voice or public sector management? An empirical investigation of determinants of public sector performance based on a survey of public officials," Journal of Applied Economics, Taylor & Francis Journals, vol. 22(1), pages 321-348, January.
    3. Hathroubi, Salem, 2013. "Epidemic corruption: a bio-economic homology," EconStor Preprints 73558, ZBW - Leibniz Information Centre for Economics.
    4. Hokky Situngkir, 2004. "The Structural Dynamics of Corruption: Artificial Society Approach," Computational Economics 0405002, University Library of Munich, Germany.
    5. Kretschmer, Anne, 2002. "Maßnahmen zur Kontrolle von Korruption: Eine modelltheoretische Untersuchung," Arbeitspapiere 25, University of Münster, Institute for Cooperatives.
    6. André Carraro & Ronald O. Hillbrecht, 2003. "Modelos Microeconômicos de Corrupção Burocrática e Seus Determinantes Econômicos," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] d36, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    7. Le, Duong Trung & Malesky, Edmund & Pham, Anh, 2020. "The impact of local corruption on business tax registration and compliance: Evidence from Vietnam," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 762-786.

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