Research

Common Pool Corruption and the Golden Goose Effect

I have designed an experimental study on corruption, framing it as stealing from a shared pool of funds by public officials. The primary focus was to analyze the collective social dilemma of corruption and understand how collective risk influences individual corruptibility. This approach has revealed horizontal interdependencies among corrupt individuals, emphasizing group interests. This study introduces a novel Common Pool Corruption game, where public officials engage in petty corruption, risking detection and a share of the common pool's remaining funds. Viewing corruption as a coordination game, the research explores two critical equilibria: 'High Corruption' and 'Low Corruption.' Different groups gravitated toward these equilibria by adjusting penalties in controlled laboratory settings. Additionally, I have analyzed the incentives associated with decisions impacting future incomes and opportunities for corruption (Golden Goose Effect). Despite a low chance of being caught in a specific act, the cumulative risk over a career is significant, leading to a displacement effect of corruption from the current to the future period.

Risk Attitude and Risk Perception in Corruption: An Experimental Analysis

Abstract:

For this experiment on corruption, I designed a coordination game to simulate how risk attitudes, beliefs, and information affect behavioral choices. The treatment design consists of a small group engaging in the common pool corruption game with a random audit, benchmarked against a control larger group engaging in the same experiment with a certain audit. Even though both the games have the same Nash equilibria, I observed that corruption was lower in the small group. The difference in observed behavior between the two groups can be explained by players' risk perception more than their risk attitude since players tend to overestimate small probabilities. Because higher uncertainty in the informational setting reduces corruption, from a policy perspective, even the threat of an audit over a small group can reduce corruption.