Petty corruption and citizen feedback

Charles Angelucci () and Antonio Russo
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Charles Angelucci: Columbia Business School

No 2015/25, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Numerous countries are introducing citizen feedback schemes to tame corruption. We study how best to incorporate feedback in public officials’ incentives. The main novelty of our proposal is to allow citizens to directly influence officials’ pay. We consider a situation in which entrepreneurs must comply with regulation before undertaking a risky activity. Officials verify compliance to determine whether to grant permits, and may engage in either bribery or extortion. Without feedback, the government has no choice but to tolerate bribery, which leads to too many permits being granted and large negative externalities. By contrast, implementing a feedback scheme that (i) rewards entrepreneurs filing complaints and (ii) ties officials’ pay to these complaints makes deterring both bribery and extortion possible. Our proposed scheme does not require the government to be able to verify the accuracy of complaints. In an extension, we incorporate the role played by intermediaries, and show their involvement makes the feedback scheme even more valuable.

Keywords: Corruption; extortion; bribery; citizen feedback; bureaucracy intermediaries (search for similar items in EconPapers)
JEL-codes: D73 H11 H83 O17 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2015
New Economics Papers: this item is included in nep-law and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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