Edit Article: Cadot, O. (1987), Corruption as a Gamble

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Return to [[BPP Field Exam Papers 2012]]] ===Model=== *Firm has to request operational permit from official *Official asks bribe, b, from firm *Firm pays bribe if b<v, if not reports official who is fired *infinite period game ===Comparative Statics=== *If wages raised optimal bribe requested is smaller, but because its smaller, it is paid more often *So paying higher wages in public sector could lead to more but petty corruption *When discount factor is bigger the size of the bribe is smaller, because official cares more about the future.

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