How Do Intermediaries Affect the Effectiveness of the Four-Eyes-Principle? An Experimental Investigation

Fan Liangcong (), Ying Zechun (), Yuemei Yuan, Zhang Xinchao () and Xu Bin ()
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Fan Liangcong: Zhejiang University, Guanghua Law School, 51 Zhijiang Road, 310008Hangzhou, China
Ying Zechun: College of Economics, Zhejiang University, 310027Hangzhou, China
Zhang Xinchao: Industrial & Commercial Bank of China, Jinan Branch, 250011Jinan, China
Xu Bin: College of Economics, Zhejiang Gongshang University, 310018Hangzhou, China

The B.E. Journal of Economic Analysis & Policy, 2019, vol. 19, issue 4, 13

Abstract: Corrupt deals are commonly arranged by intermediaries. However, attempts to deter corruption pay little attention to the role of intermediaries in corrupt deals. This paper reports a laboratory bribery experiment on corruption designed to investigate how intermediaries with information about the lowest bribe that the official is willing to accept in a briber-initiated corrupt deal affect the effectiveness of the four-eyes-principle (FEP) on deterring corruption. We find that the introduction of the FEP significantly decreases the corruption level by increasing uncertainty. However, the presence of intermediaries with information completely offsets the positive effect of introducing the FEP on preventing corruption. Our findings suggest that further research on corruption should allow a more active role of intermediaries, and legislators should take the role of intermediaries into account when designing anti-corruption mechanisms.

Keywords: intermediary; bribery experiment; the four-eyes-principle (search for similar items in EconPapers)
JEL-codes: C91 D73 K42 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1515/bejeap-2019-0059

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