Essays on the Spread and the Depth of Corruption and Anti Corruption

  • Fei Xu

Student thesis: Unknown


This thesis comprises four essays revolving around the economic research of corruption. Chapter 1 studies if higher wages prevent corruption (bribe taking). I investigate a setting where individuals who apply for public sector jobs are motivated by a mix of motivations: monetary incentives, intrinsic motivation and concern for the collective reputation of their profession. It shows that a higher salary creates doubt about individuals' true motive to be honest, resulting in the reduction of the collective reputation of the profession. This 'overjustification' effect may cause reputation-concerned individuals to be more prone to participate in corruption. The overall effect of monetary incentives on fighting corruption crucially depends on the composition of the pool of public sector workers. Chapter 2 develops a microeconomic context of corruption decisions of an individual, notably decisions to accept bribes, when the individual is endowed with a range of alternative actions over which he may be bribed. This approach extends the study of corruption besides its spread to its depth, i.e., the level of distortion of the duties of corrupt officers. This paper models individuals' distortion of their duties which captures the variable degree of corruption of individuals. I derive the level of bribe that represents the 'reservation' monetary payoff for various degrees of corruption of an individual. Chapter 3 uses the context of the degree of corruption to evaluate the effectiveness of alternative anti corruption policies. It elucidates the root of corruption: bribing the officer to take a specific action deviated from the task creates a positive surplus for the donor who pays the bribe, then there is room for a mutually beneficial deal between the two parties. It shows that salary increases may fail to extinguish corruption opportunities, but succeed in reducing the equilibrium distortion of duty. Finally, this paper examines the effect of competition among officers on the degree of corruption combining heterogeneity across corrupt officers. Chapter 4 is a first attempt at proposing the development of indirect anti corruption policies inspired by the idea of triggering bribery market failures. Based on the varying degree of corruption among officers, knowledge of the type of officers is crucial for a corrupt exchange to occur. The uncertainty about the types of officers would inhibit corruption. Therefore, 'managing' this uncertainty provides fertile ground for anti corruption measures. To illustrate this point, I present a game setup that leads to the complete unravelling of the bribery market due to adverse selection.
Date of Award1 Aug 2018
Original languageEnglish
Awarding Institution
  • The University of Manchester
SupervisorLeonidas Koutsougeras (Supervisor) & Antonio Nicolo (Supervisor)

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