Cadot, O. (1987), Corruption as a Gamble

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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
©, 2016

Return to BPP Field Exam Papers 2012]


  • 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.