Cadot, O. (1987), Corruption as a Gamble
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| Article | |
|---|---|
| Has bibtex key | |
| Has article title | Corruption as a Gamble |
| Has author | Cadot, O. |
| Has year | 1987 |
| In journal | |
| In volume | |
| In number | |
| Has pages | |
| Has publisher | |
| © edegan.com, 2016 | |
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.
