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Corruption and Adverse Selection


It is well known that in the presence of asymmetric information, adverse selection has detrimental effects on possible exchanges. We go a step further, and present a game-theoretic setup in which under such adverse selection effects there are uncertain benefits for bribing unknown players’ types (e.g., individuals, committees, or companies). A policy maker may then want to design indirect anti-corruption policies based on triggering failures for bribery attempts. In our stylized framework, we get a complete unraveling of bribes. This result can be extended to more complex environments under fairly mild conditions on players’ payoff functions.
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hal-03393076 , version 1 (21-10-2021)


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Leonidas Koutsougeras, Manuel Santos, Fei Xu. Corruption and Adverse Selection. 2019. ⟨hal-03393076⟩
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