Bribery, The rule of Law, and Cooperation: An Economic Experiment

FREIDIN, E.

Buenos Aires

Encuentro; Humboldt Colloquium; 2018

Alexander von Humboldt Foundation

Economic experiments show that participants´ cooperation into Public Goods could become unstable due to the presence of selfish incentives against group efficient outcomes. The possibility of imposing sanctions to non-cooperators or free-riders serves to stabilize or even increase cooperation. Indeed, experiments show that a centralized authority administering sanctions can be an efficient way to sustain high levels of group cooperation. In this project, we investigate whether a bribery possibility undermines this mechanism, and how it interacts with different levels of legal certainty. We introduce a 2x2 design in which we vary these two dimensions. One dimension is the availability of a bribery stage in between the contribution and the sanctioning stages of a repeated public goods game. In the bribery stage, contributors could offer a transfer to the group´s authority who could accept it and not sanction the briber, or reject it and be free to apply a sanction. In the other dimension, we vary whether high contributors could be punished, i.e., whether unfair punishment is possible or not. The results show that contributions decline only in the condition with bribery and the possibility for unfair punishment, and in this condition contributions become lower than in the other conditions. This means that bribery undermines cooperation only if there is no legal certainty.