Corruption and Social Norms

The paper investigates the effect of an exogenous social norm of administrative corruption on the incentives to be corrupt for bureaucrats that participate in the non-cooperative principal-agent game. This setting leads to many density dependent effects: i.e., critical population thresholds, which separate equilibriums with low levels of corruption from equilibriums with high levels of corruption. In order to counter the problem of multiple equilibriums evolutionary game theory is employed into the analysis. This means that people are no longer assumed able to be perfectly rational. Rather, they adopt strategies on the basis of trial and error, adapting their behavior on the basis of its ‘success’ with the result that they gravitate towards the relatively most successful type of behavior. As a result, we characterize the emergence of an equilibrium behavioral pattern within the population of bureaucrats as a social convention arising under the assumption that they tend to imitate relatively more rewarding behaviors.