The Role of Intermediaries in Corruption

• Published in: Public choice Vol. 122; no. 3/4; pp. 277 - 298
• Main Author: Bayar, Güzin
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer 01.03.2005; Springer Nature B.V
• Subjects: 1210; 9130; Bribery; Bureaucracy; Clients; Corruption; Corruption in government; Expected utility; Experimental/theoretical; Financial intermediaries; Game theory; Government corruption; Government officials; Honesty; Information intermediaries; Mathematical analysis; Monopoly; Moral corruption; Offenses; Police; Police corruption; Political corruption; Politics & political behavior; Prices; Probability; Public choice; Public officials; Public policy; Reservation prices; Social costs; Social structure; Studies; Trade intermediaries
• ISSN: 0048-5829; 1573-7101
• DOI: 10.1007/s11127-005-5916-8

The aim of the article is to examine a briber initiated corrupt transaction and the role of intermediaries in such a transaction, using a game theoretical model. Clients applying the intermediaries do so to be able to get rid of high red tape applied by the officers. They prefer using intermediary instead of offering a bribe to the officers directly since they do not know which officers are corrupt (accepts a bribe offer) and how much bribe should be given to the corrupt officers. In our model, the client wants to offer a bribe to get rid of red tape, however, she hesitates due to the possibility of offering a bribe to an honest public officer and as a result getting a penalty. Client also hesitates due to the possibility of offering an amount of bribe lower than the reservation price of the corrupt officer; thus being rejected. Intermediaries, knowing which officers are corrupt and the reservation prices of those corrupt officers, decrease the risk of offering a bribe. Two cases; one with intermediary, the other without, in such a scenario is examined and the results of the two are compared.