Bribery, the Rule of Law, and Cooperation

FREIDIN, E.; SCHMELZ, K. ; FISCHBACHER, U.

Kreuzlingen

Congreso; Thurgau Experimental Economics Meeting; 2018

Thurgau Institute of Economics

Public Goods experimentsshow that a centralized authority administering sanctions can be an efficientway to sustain high levels of group cooperation. In the present study, weinvestigate whether a bribery possibility undermines this mechanism, and how itinteracts with different levels of legal certainty. We introduce a 2x2 designin which we vary these two dimensions. One dimension is the availability of abribery stage in between the contribution and the sanctioning stages of arepeated public goods game with a partner design. In the bribery stage,contributors could offer a transfer to the group´s authority who could acceptit and not sanction the briber, or reject it and be free to apply a sanction. Inthe other dimension, we vary whether high contributors could be punished, i.e.,whether unfair punishment is possible or not. The results show thatcontributions decline only in the condition with bribery and the possibilityfor unfair punishment, and in this condition contributions become lower than inthe other conditions. This means that bribery undermines cooperation only ifthere is no legal certainty. First, reduced and less effective sanctions by thebribery condition in the condition with possibility for unfair punishment isone explanation for this difference. Second, non-bribing above-averagecontributors received more frequent and higher sanctions in condition with briberyand unfair punishment than in the condition with bribery and fair punishment.This coercion apparently led high contributors to bribe more, and eventually,sanctions were less effective in increasing contributions in the former thanthe latter condition. We conclude that bribery undermines cooperative normsonly under institutional conditions that allow authorities to exert excessivepower.