Corruption and Adverse Selection

Leonidas Koustougeras (), Manuel Santos and Fei Xu ()
Additional contact information
Leonidas Koustougeras: University of Manchester, School of Social Sciences, https://www.manchester.ac.uk/
Fei Xu: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, https://www.umu.se/handelshogskolan

No 1007, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: It is well known that in the presence of asymmetric information, adverse selection has detrimental effects on possible exchanges. We go a step further, and present a game-theoretic setup in which under such adverse selection effects there are uncertain benefits for bribing unknown players’ types (e.g., individuals, committees, or companies). A policy maker may then want to design indirect anti-corruption policies based on triggering failures for bribery attempts. In our stylized framework, we get a complete unraveling of bribes. This result can be extended to more complex environments under fairly mild conditions on players’ payoff functions.

Keywords: Corruption; bribe; adverse selection (search for similar items in EconPapers)
JEL-codes: D71 D80 D82 D86 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2022-08-30
New Economics Papers: this item is included in nep-mic
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http://www.usbe.umu.se/ues/ues1007.pdf Full text (application/pdf)

Related works:
Working Paper: Corruption and Adverse Selection (2019)
Working Paper: Corruption and Adverse Selection (2019)
Working Paper: Corruption and Adverse Selection (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:umnees:1007

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