Corruption and the Public Display of Wealth

Simona Fabrizi () and Steffen Lippert

No 1202, Working Papers from University of Otago, Department of Economics

Abstract: We build a principal-agent-client model of corruption, allowing for heterogeneity in the value of public projects relative to the cost of monitoring their execution and for uncertainty of corruptors regarding the value of a project conducted. We derive the conditions under which officials with low-value projects have an incentive to signal their projects' type, and thereby facilitate their corruption, by means of public displays of wealth. While such public displays reduce the probability with which bribes are offered to officials conducting high-value projects, they increase the probability with which these officials accept bribes sufficiently to offset any positive effect.

Keywords: Corruption; Incentives; Signaling; Public Displays of Wealth (search for similar items in EconPapers)
JEL-codes: D73 D82 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-06, Revised 2012-06
New Economics Papers: this item is included in nep-cta, nep-pbe and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.otago.ac.nz/economics/research/otago076653.pdf First version, 2012 (application/pdf)

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Journal Article: Corruption and the public display of wealth (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1202

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