Determinants of Corruption
In this paper we study determinants of the level of certain types corruption in a society. To that end, we apply the simplest technique used in Evolutionary Game Theory, namely, the replicator dynamics with two types of agents, corrupted, and not corrupte
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Abstract. In this paper we study determinants of the level of certain types corruption in a society. To that end, we apply the simplest technique used in Evolutionary Game Theory, namely, the replicator dynamics with two types of agents, corrupted, and not corrupted. Through a learning interpretation of that technique, we obtain the main determinants of corruption are the initial proportion of corrupted people, and the relative pecuniary gain of being corrupted, relative to the pecuniary gain of being not corrupted. The model applies to all types of corruption for which the larger the number of corrupted people is, the larger the expected payoff of being corrupted will be.
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Introduction
The main objective of this paper is to find determinants of corruption in general, although we concentrate on what is called systemic corruption and microcorruption (see O’Hara (2014)), that is, widespread corruption, and hence we concentrate in those types of corruption in which the more corrupted people there is in the society, the more beneficial to be corrupted is. The importance of studying corruption in economics comes mainly from the fact that corruption and social capital are related issues, both of which are very important in order to promote growth and development. In the paper by Mauro (1995) it is shown that corruption is associated with low income, although it has not been established the direction of causation yet. Also, corruption has been related to political institutions and political outcomes (see Persson et al. (2003)), which in turn are crucial to growth, as argued by North (1991). For more on the negative correlation between corruption and growth, see Besley (2006) — Figure 1.6, among others—. Similarly, there is evidence that there exists a positive correlation between social capital and growth, as it is shown by Temple and Johnson (1998). They construct an index of social capital which turned out to be a good predictor of economic growth. One of the main ingredients of that index is again the level of corruption in the society. See also Fukuyama (1995) for more arguments in favor of the positive correlation between social capital, honest behaviour (not corruption) and growth. In this paper, however, we strongly depart from standard studies on corruption, as most of them concentrate on public corruption by officials, governments, power elites, tax havens, abuse of power, etc. That is, for us corruption is not merely vested interests (of the most powerful people of the society) against the c Springer International Publishing Switzerland 2016 R. Le´ on et al. (Eds.): MS 2016, LNBIP 254, pp. 104–111, 2016. DOI: 10.1007/978-3-319-40506-3 11
Determinants of Corruption
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common good (See O’hara (2014)). We will say that an action is corrupted, if that action violates or breaks the rules prevailing in the society. An agent is corrupted, then, if it commits a corrupted action. Therefore, in particular, all the informal economy is a form of corruption. This last form of corruption is not always denounced in the li
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