Friend or foe? Social ties in bribery and corruption
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Friend or foe? Social ties in bribery and corruption Jin Di Zheng1 · Arthur Schram2,3 · Gönül Doğan4 Received: 21 February 2020 / Revised: 15 September 2020 / Accepted: 18 September 2020 © The Author(s) 2020
Abstract This paper studies how social ties interact with bribery and corruption. In the laboratory, subjects are in triads where two ‘performers’ individually complete an objective real-effort task and an evaluator designates one of them as the winner of a monetary prize. In one treatment dimension, we vary whether performers can bribe the evaluator—where any bribe made is non-refundable, irrespective of the evaluator’s decision. A second treatment dimension varies the induced social ties between the evaluator and the performers. The experimental evidence suggests that both bribes and social ties may corrupt evaluators’ decisions. Bribes decrease the importance of performance in the decision. The effect of social ties is asymmetric. While performers’ bribes vary only little with their ties to the evaluator, evaluators exhibit favoritism based on social ties when bribes are not possible. This ‘social-tie-based’ corruption is, however, replaced by bribe-based corruption when bribes are possible. We argue that these results have concrete consequences for possible anti-corruption policies. Keywords Social ties · In-group favoritism · Bribery · Laboratory experiment JEL Classification C9 · D03 · D04v D73 Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1068 3-020-09683-7) contains supplementary material, which is available to authorized users. * Arthur Schram [email protected] Jin Di Zheng [email protected] Gönül Doğan [email protected]‑koeln.de 1
The Economics Experimental Lab, Nanjing Audit University, Nanjing, People’s Republic of China
2
CREED, Amsterdam School of Economics, Amsterdam, Netherlands
3
Department of Economics, European University Institute, Fiesole, Italy
4
Faculty of Management, Economics and Social Sciences, University of Cologne, Cologne, Germany
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1 Introduction People are often asked to evaluate others. Evaluations can be informal—like deciding on whom to ask on a date—or formal, such as deciding on whom to hire for a job or when grading an exam. Evaluations may be affected by favoritism or by monetary factors such as wedding dowries, expected productivity, or bribes (Abbink et al. 2002; Gneezy et al. 2018). In this paper, we ask whether and how the effects of favoritism and bribes interact in affecting an evaluation. This is important question to address; as we argue below, the success of anti-corruption policies may well depend on this interaction. Monetary incentives may be legitimate or illegitimate and they may be socially acceptable or unacceptable. Our interest lies in bribes. In most countries, basing a decision on bribes is illegitimate (and in many cases socially unacceptable); here, we refer to such decisions as ‘corrupt’. Corruption, defined as “the abuse of public office for
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