A corruption dilemma

Abstract

We experimentally investigate the effects of uncertain negative externalities on corruption engagement and social beliefs. We report two experiments in which corruption is modeled as a common-pool resource. In our first experiment, participants face a decision to bribe a public official for a service where accepted bribes impose probabilistic external costs on the briber and other participants. We find that the decision to bribe is positively associated with the belief that others will do the same. We also find that participants overestimate their ability to avoid external costs. Experiment 2 explores endogeneity and ambiguity in types using a contextualized version of the corruption dilemma. Consistent with experiment 1, choosing to offer a bribe is positively associated with the expectation of similar behavior. Curiously, we find little evidence that beliefs about one’s own type affect the decision to bribe.