A THEORY OF CORRUPTION

Rajesh Chakrabarti
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Rajesh Chakrabarti: University of Alberta

No 269, Computing in Economics and Finance 2000 from Society for Computational Economics

Abstract: Most theoretical studies of corruption tend to focus on the micro models of the phenomenon studying individual acts of corruption, while the empirical papers typically study corruption at the country level. This paper builds an agent-based computational dynamic general equilibrium model of corruption. It views corruption as a risky activity with harmful macro effects. Individual choice of corruption levels lead to a societal level of corruption, which in turn, affects the risk and return of corruption at the individual level. Using simulations in a multi-generational setting with heterogeneous agents, it demonstrates that societies have locally stable equilibrium levels of corruption that depend upon a small number of socio-economic factors. It shows that under certain conditions it is possible for corruption to go on an ever-increasing trajectory till it stifles all economic activity.

Date: 2000-07-05
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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecf0:269

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