Open AccessChoosing Agents and Monitoring Consumption: A note on Wealth as a Corruption‐Controlling Device *
Author(s) -
Tella Rafael Di,
Weinschelbaum Federico
Publication year - 2008
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/j.1468-0297.2008.02180.x
Subject(s) - honesty , consumption (sociology) , language change , economics , principal (computer security) , microeconomics , public economics , computer science , computer security , psychology , social psychology , sociology , social science , art , literature
There are a large number of cases where corruption has been discovered when investigating levels of consumption that appear to be hard to justify. The informativeness of an agent's level of consumption depends on his legal income and initial level of wealth, as conspicuous consumption by wealthy agents leads to little updating of the principal's belief about their honesty. This introduces a tendency to prefer poor agents as they are easier to monitor. More generally, we describe the basic problem of choosing agents and monitoring consumption with the aim of reducing corruption, and discuss features of the practical applications.