On Monetary and Non-Monetary Interventions to Combat Corruption

Ritwik Banerjee and Arnab Mitra

No 10608, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper studies the relative effectiveness of extrinsic monetary disincentives and intrinsic non-monetary disincentives to corruption. In doing so, we also test the Beckarian prediction that at the same level of expected payoff, a low probability of detection with high penalty is a stronger deterrent to corruption than a high probability of detection with low penalty. In Experiment 1, two treatments are designed to study the effect of a low probability of detection with high penalty, and a high probability of detection with low penalty, on bribe taking behavior in a harassment bribery game. In Experiment 2, subjects participate in the same baseline harassment bribery game either without or after having gone through a four-week ethics education program. Results show that a) a low probability of detection with high penalty reduces both the amount and the likelihood of bribe demand, b) a high probability of detection with low penalty has no effect on bribe demand behavior, c) normative appeals of ethics education has a small effect on the likelihood but not on the amount of bribe demand, when measured immediately after the intervention, d) the effect of ethics education vanishes when measured four weeks after the intervention, e) extrinsic monetary intervention, particularly low probability of detection with high penalty, is more effective than normative appeal driven non-monetary intervention that aim to increase intrinsic moral cost, f) analysis of belief about acceptability of bribe demand indicates that the underlying channels through which monetary and non-monetary interventions work are very different.

Keywords: probability of audit; penalty; harassment bribes; corruption; ethics education (search for similar items in EconPapers)
JEL-codes: C91 C92 D03 K42 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2017-03
New Economics Papers: this item is included in nep-acc, nep-exp and nep-law
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Published - published in : Journal of Economic Behavior and Organization, 2018, 149, 332 - 355

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Journal Article: On monetary and non-monetary interventions to combat corruption (2018)
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