On monetary and non-monetary interventions to combat corruption

Abstract

We study the relative effectiveness of extrinsic monetary disincentives and intrinsic non-monetary disincentives to corruption, using a harassment bribery game. In doing so, we also test the Beckerian prediction that at the same level of expected payoff, a low probability of detection with high fine is a stronger deterrent to corruption than a high probability of detection with low fine. In Experiment 1, two treatments are designed to study the effect of a low probability of detection with high fine and a high probability of detection with low fine, on bribe taking behavior. In Experiment 2, subjects participate in the same baseline harassment bribery game either without or after having gone through a four-week ethics education program. Results show that: (a) a low probability of detection with high fine reduces both the amount and the likelihood of bribe demand, (b) a high probability of detection with low fine has no effect on bribe demand, (c) normative appeals of ethics education has a small effect on the likelihood but not on the amount of bribe demand, when measured immediately after the intervention, (d) the effect of ethics education vanishes when measured four weeks after the intervention.