Underdevelopment and the economics of corruption: A game theory approach

Previous attempts to treat corruption are surveyed critically. A game theory approach is preferred on the grounds that it can most effectively explain the basis for decisions of reasonable men to be corrupt. A simple model is presented showing how bribery might be a dominant strategy. A prisoner...

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Bibliographic Details
Published in:World development 1982-08, Vol.10 (8), p.677-687
Main Author: Macrae, John
Format: Article
Language:English
Subjects:
Corruption
Underdevelop/Underdeveloped/ Underdevelopment
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Summary:Previous attempts to treat corruption are surveyed critically. A game theory approach is preferred on the grounds that it can most effectively explain the basis for decisions of reasonable men to be corrupt. A simple model is presented showing how bribery might be a dominant strategy. A prisoner's dilemma type of situation emerges with the added complication that the judge and jailer may be corrupt. Other conclusions are that one official will not accept bribes from more than one firm. It is impossible to predict which firm will win the contract. No obvious solution emerges and legal remedies are discounted. This paper then reviews the principal general equilibrium effects and concludes that their likely effect on economic development is negative.
ISSN:0305-750X
1873-5991
DOI:10.1016/0305-750X(82)90093-6