Business Faculty Publications

Title

Petty Corruption in a Multi-Person, Multi-Stage Bureaucratic Process: formal Models and an Experimental Assessment

Document Type

Article

Publication Date

11-1-2019

Publication Title

Research in Economics and Management

Keywords

Petty corruption, bureaucratic control, mathematical modeling, economic development

Disciplines

Business | Business Law, Public Responsibility, and Ethics

Abstract

This paper examines the case where a citizen faces a sequence of bureaucrats in a transaction approval process. Each bureaucrat has the authority to disapprove an application and all of the bureaucrats must approve an application for it to be accepted. Each bureaucrat also has the ability to request a facilitating payment during the review process. Models are developed to explain bureaucrat
behavior when there are no sanctions present to moderate the requests for facilitating payments, and where another government official with the authority to impose penalties on corrupt behavior is included in the process. Model I demonstrated that there is no economically rational reason for a bureaucrat to forgo requesting a facilitating payment. Model II showed that relatively low sanction multipliers are required to induce a bureaucrat to forgo the opportunity to request a bribe if the bureaucrat is in the early steps in a multi-step approval process. The predictions made by Model II were then tested using students as surrogates for bureaucrats. The results indicate that wide dissemination of information about sanctions that have been imposed could have a preventive or at least moderating effect on bribe behavior by public sector employees.

DOI

10.22158/rem.v4n1p69

Volume

4

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