Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93768
Authors: 
Vetter, Stefan
Year of Publication: 
2012
Series/Report no.: 
SFB/TR 15 Discussion Paper 378
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.
Subjects: 
delegation
gift exchange
corruption
lobbying
negative externalities
JEL: 
C91
D62
D63
D73
K42
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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