Corruption, Norm Violation and Decay in Social Capital

Ritwik Banerjee

No 9859, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper studies the link between corruption and social capital (measured as trust), using data from a lab experiment. Subjects play either a harassment bribery game or a strategically identical but differently framed ultimatum game, followed by a trust game. In a second experiment, we elicit social appropriateness norm of actions in the bribery game and the ultimatum game treatments. Our experimental design allows us to examine whether subjects, who have been asked to pay a bribe, are less likely to trust than those in an isomorphic role in the ultimatum game. We also uncover the underlying mechanism behind any such behavioral spillover. Results suggest that a) there is a negative spillover effect of corruption on trust and the effect increases with decrease in social appropriateness norm of the bribe demand; b) lower trust in the bribery game treatment is explained by lower expected return on trust; c) surprisingly, for both the bribery and the ultimatum game treatments, social appropriateness norm violation engenders the decay in trust through its adverse effect on belief about trustworthiness.

Keywords: social capital; social norm; trust games; corruption (search for similar items in EconPapers)
JEL-codes: C91 C92 D03 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2016-03
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-law and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Published - published in: Journal of Public Economics, 2016, 137, 14–27

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Related works:
Journal Article: Corruption, norm violation and decay in social capital (2016)
Working Paper: Corruption, Norm Violation and Decay in Social Capital (2015)
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