Par master

Corruption is a conspicuous phenomenon in developing countries like China and India. Indian economist Basu proposed to legalize bribe-giving in 2011, which have given rise to great and heated debates between the economists and socialists on Basu’s proposal in recent years. Basu pointed out that in countries like India, there is a common situation when the bureaucrat often demands some “extra fee” to provide a public service (delivering a driver's license, a visa…) which is supposed to belong to the citizen. In such a situation, which is called “harassment bribe” by Basu, an honest citizen should be less punished by the law and should be given leniency if they report the bribery. The economic theoretical analyses on bribery is either by microeconomic method or by models. The latter often includes principal-agent model and game theory. Game theoretical analysis is most frequently used to analyze Basu’s proposal as it can reflect the strategic interactions of the individuals in a corrupt behavior. Even though the individuals are assumed to be purely rational, the social, cultural and psychological factors sometimes can have more significant effects on individuals’ behaviors. That’s why the experimental studies based on a bribery game is not always in accordance with the game theoretical analyses. The literature about encouraging the whistle-blowing in the corrupting behavior can be traced back to Rose-Ackerman (1975, 1978). And one of the earliest experimental analyses based on bribery game was realized by Abbink et al. in 1999, which affirmed the three important characteristics of bribery are reciprocity, negative externalities and its inherent risk. To break the trust between the two corrupting parts, Spagnolo et al. (2005) firstly compared corruption to cartel relationship, and they deemed that asymmetric penalties and leniency may be effective in breaking the inner trust in the illegal transaction and then can be used to deter the corruption. Nell (2007) then built a bribery game in adopting different penalties on the bribers and the bribees before and after the reciprocity. And he found that a high penalty on bureaucrat for doing the favor and a low penalty on briber for giving a bribe will deter the bribery effectively. However, by reviewing his game true and hypotheses, I find that generally, a low fine on briber, a low fine on bureaucrat before the reciprocity while a higher one afterwards will effectively encourage either part to whistle the blowing or cut off their benefits of being corrupt. Furthermore, a total leniency on briber is also effective on elimination of the corruption trade but and only if the briber reports the bribery after the reciprocity. However, Abbink et al. in 2002 confirmed that encouraging the whistle-blowing in a collusive bribery (“non-harassment bribe”) is not effective in anti-corruption, especially when the game is repeated (Spagnolo et al.in 2015). Some dishonest citizens may also abuse the policy and frame up the honest bureaucrat. This concern is dismissed by Serra, who brings up the idea of a combination of “bottom-up” and a “top-down” mechanism to guarantee the justice of the legislation. As Nell completed, the low penalty on bribers will backfire when the dishonest bribers may use the leniency policy to threaten an honest bureaucrat to get what he is not entitled to. Basu’s proposal seems to resolve the backfire worries of Nell if we can successfully pick out the “harassment bribe” scenarios, which is not easy especially when the criteria are not objective. For example, using the bribery game tree and the hypotheses of Spagnolo in 2012, I notice that if fulfilling all the assumptions, the “harassment bribe” happens only when the cost of delivering the license for the bureaucrat is positive. Besides, Basu’s proposal (which in this case equals a double penalty on the bureaucrat and the bribe is refunded to the briber who blows the whistle) only works when the cost of whistle-blowing (pecuniary, mental, or moral) is less than the bribe amount, and leniency policy works if the penalty on the bureaucrat is big enough (Verma and Sengupta in 2015). Even though we can successfully identify a “harassment bribe”, and the cost of reporting is trivial, a bribe amount may become higher and accordingly, bribery may transfer to higher level of officials with Basu’s proposal (Oak in 2013, Abbink et al. in 2013, Verma and Sengupta in 2015). The bureaucrat who is reported may get rid of the conviction of the corrupt crime, or they can retaliate the citizens once they get back to their job, which is often the case because the “harassment bribes” are often petty corruption and the bureaucrat often can keep their official position (Abbink et al. in 2013 and 2014, Apesteguia et al. in 2007, Basu in 2016, Bigoni et al. in 2015, Engel et al. in 2012, Oak in 20113, Hinloopen and Soetevent in 2008, Spagnolo et al. in 2017, Verma and Sengupta in 2015, …). What’s worse is that in countries where the corruption is conspicuous like China and India, the bureaucrat often has such an arbitrary power that they can even change a “harassment bribe” scenario to a “non-harassment bribe” scenario (Oak in 2013, Li, X 2012). That’s why the statistics in corruption after the reform in 1979 in China shows no sign of effectiveness and success of the anti-corruption policy with asymmetric punishment and leniency (Spagnolo et al. in 2017). The mechanisms such as rotation of staff between the officials (Abbink 2012), the “bottom-up” and a “top-down” mechanism (Barr and Serra 2009), the competition between the officials (Ryvkin & Serra in 2013), a platform such as http://ipaidabribe.com/ (Serra in 2016) to encourage the whistle-blowing may help weaken the monopoly power of the bureaucrat, but the effects of these external factors are always limited. An experiment by comparing the effectiveness of Basu’s proposal and leniency found that more bribery cases appear under asymmetric punishment in China compared with Germany (Abbink et al. in 2013). Kingston (2007) have already pointed out that the social structure can impact the corruption. By building a parochial corruption game, he confirmed that in a society in lack of spirit of contract and confidence, the social network and connection will “kidnap” the individuals to take participate into corruption for the collective interests of the social group which they belong to, especially in the long term.