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Petty corruption: A game‐theoretic approach
Author(s) -
LambertMogiliansky Ariane,
Majumdar Mukul,
Radner Roy
Publication year - 2008
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2008.00078.x
Subject(s) - extortion , language change , clearance , economics , value (mathematics) , microeconomics , welfare , mathematical economics , computer science , political science , market economy , medicine , art , literature , machine learning , law , urology
The paper explores a game‐theoretic model of petty corruption involving a sequence of entrepreneurs and a track of bureaucrats. Each entrepreneur's project is approved if and only if it is cleared by each bureaucrat. The project value is stochastic; its value is observed only by the entrepreneur, but its distribution is common knowledge. Each bureaucrat clears the project only if a bribe is paid. The bribe for qualified projects (“extortion”) and unqualified projects (“capture”) may differ. We identify the nature and welfare implications of different types of equilibria under appropriate technical assumptions on the structure of the game.