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The Powerful, the Powerless, and the Grabbing: Non-Nash Land Grabbing in the Lab

Felix Albrecht, Björn Frank (), Simone Gobien, Maren Hartmann, Özcan Ihtiyar, Elina Khachatryan, Nataliya Kusa, Ahmed Rashad (), Mohamed Ismail Sabry, Sondos Shaheen and Thomas Stöber
Additional contact information
Felix Albrecht: University of Bonn
Simone Gobien: GIGA (German Institute of Global and Area Studies)
Maren Hartmann: Heinrich Heine University Düsseldorf
Özcan Ihtiyar: University of Kassel
Elina Khachatryan: University of Kassel
Nataliya Kusa: University of Kassel
Mohamed Ismail Sabry: Philipps University of Marburg
Sondos Shaheen: Heilbronn University
Thomas Stöber: Heinrich Heine University Düsseldorf

Homo Oeconomicus: Journal of Behavioral and Institutional Economics, 2016, vol. 33, issue 3, 219-242

Abstract: Abstract Our paper models the interaction between authorities in a country with poor rule of law and a potentially acquisitive agent (e.g., an investor interested in illegitimate land acquisition), whose actions are possibly licensed by the corrupt authorities. We explore this relationship in a two-stage experiment where the authorities have the right to expropriate the investor’s earnings, if they are not content with the share of the profit they receive as a bribe. Realizing this condition, potential investors’ initial decision is whether to become a land grabber in such an authoritarian state or not. Although the risks are obvious, we find that many agents do not act according to the Nash equilibrium of the game. Many subjects in the first stage of the game, who face a potential total loss when choosing to enter into the second stage of the game, accept the risk and try to bribe the second stage dictator. Also deviating from the Nash equilibrium, the second-stage dictators often appear to be appeasable by bribery.

Keywords: Land transactions; Land grabbing; Weak institutions; Appropriation; Experiments (search for similar items in EconPapers)
JEL-codes: C91 F21 O13 Q15 (search for similar items in EconPapers)
Date: 2016
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Homo Oeconomicus: Journal of Behavioral and Institutional Economics is currently edited by M.J. Holler, M. Kocher and K.K. Sieberg

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Handle: RePEc:spr:homoec:v:33:y:2016:i:3:d:10.1007_s41412-016-0024-1