Scholarly record
CORRUPTION AND ECONOMIC THEORY
Abstract
Corruption is a phenomenon with many facets, which is usually interpreted from the viewpoints of a number of alternative approaches. This paper analyzes the problem of corruption from the perspective of economic theory as a science of general principles concerning the operation of societys economic life. Does economics have something to say about the problem of corruption? It its methodological approach relevant for analyzing corruption? We think that it is. Even though theoretical economics has not made the problem of corruption subject to its attention, analyzing its historical evolution makes it possible to corroborate many economists interest in corruptions negative impact on the economy as well as the possibility of understanding the problem of corruption within the methodological terrain of alternative economic trends. This paper emphasizes the significance of the theory of rational choice for investigating the motives of corrupt choices in addition to defining corruption in the context of this theory. By applying the Neumann-Morgenstern expected utility function, the paper confirms that the duration and severity of punishment does not represent that great a risk for agents of corruption in particular, this concerns individuals without aversion to risk. However, participants in corruption react to a change in the probability of discovery by limiting their activities in a relatively significant way, which makes it possible to increase the number of revealed and convicted perpetrators and, at the same time, lower the number of potential corrupt exchanges. In game theory, the final solution for the dilemma of corrupt choices shows that corrupt participants in economic relationships are able to crowd out honest agents. However, in the case of repeated games, it pays for the entities to play ethically.
Publication Impact Profile
Publication details
References13
Becker, G. S., Crime and Punishment: An Economic Approach. Journal of Political Economy, vol. 76/issue 2, pp 169-217, 1968.
Buchanan, J.M., Tullock, G., & Tollison, R.D., Toward a Theory of the Rent-Seeking Society, Texas, A&M University Press, 1980.
Hellmann, J., Jones, G., & Kaufmann, D., Seize the State, Seize the Day: State Capture, Corruption and Influence in Transition Economies. World Bank policy research working paper. September, No. 2444. Retrieved March 10, 2018, from http://www.worldbank.org/wbi/governance, 2002.
Nash, J. F., The Bargaining Problem. Econometrica, vol. 18, pp 155–162, 1950.
North, D. C., Institutions, Institutional Change and Economic Performance. Cambridge, University Press, 1990.
Nye, J.S., Corruption and Political development. A Cost-Benefit Analysis Political Corruption, American Political Science Review, vol. 61, pp 417–427, 1967.
Rothbard, N.M., Ekonomie státních zásahů. Praha, Liberální institut, MegaPrint, 2001.
Sen, A., On Ethics and Economics, Oxford, Basil Blackwell, 1991.
Tanzi, V., Corruption Around the World. May, 1 1998. IMF Working Paper, vol. 98/63, pp 8-10. Retrieved February 25, 2018, from http://www.imf.org/external/Pubs/FT/staffp/1998/12 98/pdf/tanzi.pdf/, 1998.
Tulock, G., Corruption Theory and Practice. Contemporary Economic Policy, vol.1/issue 3, pp 6-13, 1996.
Von-Neumann, J., Morgenstern, O., Theory of Games and Economic Behavior. Osmania, digital Library of India. 2005-06-25. doi: http://www.new.dli.ernet.in/handle/2015/215284/, 1944.
Williamson, O. E., The New Institutional Economics: Taking Stock, Looking Ahead. Journal of Economic Literature, vol. 38, pp 595–613, 2000.
Wei, S.J., Corruption in Economic Transition and Development: Grease or Sand? Draft for the UNECE Spring Seminar in Geneva on May 7, pp 1-36, Retrieved February, 16, 2018, from http://www.unece.org/press/pr2001/01gen10e.html/. 2001.
View or Download full articleAccess options
SWS access login
Login as SWS Scientific CommitteeLogin as SWS Scientific PartnerLogin as SWS AuthorAuthors and approved SWS contributors will read and export their own linked papers after identity matching by SWS profile, email and SGEM GlobalID.
For librarian assistance: [email protected]
Purchase Instant Access
- Article can be downloaded after successful payment.
- Article may be used according to SWS library access terms.
- Article cannot be redistributed.
