Delegation and Rewards

Vetter, Stefan (April 2012): Delegation and Rewards. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2012-13

Abstract

We study experimentally whether anti-corruption policies with a focus on bribery might be insufficient to uncover more subtle ways of gaining an unfair advantage. In particular, we investigate whether an implicit agreement to exchange favors between a decision-maker and a lobbying party serves as a legal substitute for corruption. Due to the obvious lack of field data on these activities, the laboratory provides an excellent opportunity to study this question. We find that even the pure anticipation of future rewards from a lobbying party suffices to bias a decision-maker in favor of this party, even though it creates negative externalities to others. Although future rewards are not contractible, the benefitting party voluntarily compensates decision-makers for partisan choices. In this way, both receive higher payoffs, but aggregate welfare is lower than without a rewards channel. Thus, the outcome mirrors what might have been achieved via conventional bribing, while not being illegal.

• Dokumententyp: Paper
• Keywords: delegation, gift exchange, corruption, lobbying, negative externalities
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Munich Discussion Papers in Economics
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: C91, D62, D63, D73, K42
• Sprache: Englisch

Literaturliste

Abbink, K. (2004): “Staff rotation as an anti-corruption policy.” European Journal of Political Economy, Vol. 20, 887-906.

Abbink, K., B. Irlenbusch, and E. Renner (2002): “An experimental bribery game.” Journal of Law, Economics, and Organization, Vol. 18(2), 428-453.

Abbink, K. and H. Henning-Schmidt (2006): “Neutral versus loaded instructions in a bribery experiment.” Experimental Economics, Vol. 9, 103-121.

Barr, A., and D. Serra (2009): “The effects of externalities and framing on bribery.” Experimental Economics, Vol. 12, 488-503.

Bartling B., and U. Fischbacher (2011): ”Shifting the blame: on delegation and responsibility.“ Review of Economic Studies, Vol. 78(4).

Berg, J., J. Dickhaut, and K. McCabe (1995): “Trust, reciprocity, and social history.” Games and Economic Behavior, Vol. 10(1), 122-142.

Büchner, S., A. Freytag, L. Gonzales, and W. Güth (2008): “Bribery and public procurement: an experimental study.” Public Choice, Vol. 137, 103-117.

Charness, G., R. Cobo-Reyes, N. Jiménez, J. A. Lacomba, and F. Lagos (2011): “The hidden advantage of delegation: Pareto-improvements in a gift exchange game.” American Economic Review, forthcoming.

Coffman, L. (2011): “Intermediation reduces punishment (and reward).” American Economic Journal: Microeconomics, Vol. 3(4), 77-106.

Fershtman, C., and U. Gneezy (2001): “Strategic delegation: An experiment.” RAND Journal of Economics, Vol. 32(2), 352-368.

Fischbacher, U. (2007): “z-Tree: Zurich Toolbox for Ready-made Economic Experiments.” Experimental Economics, Vol 10, 171-178.

Fischbacher, U., S. Gächter, and E. Fehr (2001): “Are people conditionally cooperative? Evidence from a public goods experiment.” Economics Letters, 71, 397-404.

Gonzales, L., W. Güth, and M. V. Levati (2007): “Speeding up bureaucrats by greasing them: an experimental study.” Homo Oeconomicus. Vol. 27(1), 5-20.

Greiner, B. (2004): “An Online Recruitment System for Economic Experiments.“ in: Kremer, Kurt, and Volker Macho (eds.): Forschung und wissenschaftliches Rechnen. Göttingen: Gesellschaft für Wissenschaftliche Datenverarbeitung, 79-93.

Hannan, J. R., G. Loewenstein, and R. A. Weber (2010): “Self-interest through delegation: An additional rationale for the principle agent relationship.” American Economic Review, Vol. 100(4), 1826-1846.

Hannan, J. R., R. A. Weber, and J. Woon (2011): “An experimental investigation of electoral delegation and the provision of public goods.” American Journal of Political Sciences, Vol. 55(4), 737-751.

Lambsdorff, J. Graf, and B. Frank (2010): “Bribing versus gift-giving – An experiment.” Journal of Economic Psychology, Vol. 31, 347-357.

Malmendier, U., and K. Schmidt (2011): “You owe me!”, mimeo.

Potters, J., and F. van Winden (2000): “Professionals and students in a lobbying experiment. Professional rules of conduct and subject surrogacy.” Journal of Economic Behavior & Organization, Vol. 43, 499-522.

Svensson, J. (2003): “Who must pay bribes and how much? Evidence from a cross-section of firms.” Quarterly Journal of Economics, 118(1), 207-230.

Treisman, D. (2000): “The causes of corruption: a cross-national study.” Journal of Public Economics, Vol. 76, 399-457.