comments on "asymmetric punishment as an instrument of corruption control"
TRANSCRIPT
Discussion:Asymmetric Punishment as an Instrument of
Corruption Control
Jenny Simon (SITE)
August 31, 2015
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 1 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?
A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fine
on the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
A simple model of corruption
A specific class of corruption: Harassment bribery
A specific policy instrument: Asymmetric punishment
Endogenous detection probabilities (whistle blowing)
Q: Is legalizing bribe giving a workable policy instrument?A: It depends...
on the size of the fineon the cost and effectiveness of whistle blowing
Interesting: Bribes may increase in response to higher detectionprobability or more asymmetry.
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 2 / 7
When is cooperative bargaining the relevant concept?
Implications of NB solution:implements the efficient solutionsurplus shared equally
Some results emerge because of this modeling choice:bribe size increasing in asymmetry
Makes welfare analysis hardoutcome can’t be rejected on efficiency grounds(Why is corruption bad?)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 3 / 7
When is cooperative bargaining the relevant concept?
Implications of NB solution:implements the efficient solutionsurplus shared equally
Some results emerge because of this modeling choice:bribe size increasing in asymmetry
Makes welfare analysis hardoutcome can’t be rejected on efficiency grounds(Why is corruption bad?)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 3 / 7
When is cooperative bargaining the relevant concept?
Implications of NB solution:implements the efficient solutionsurplus shared equally
Some results emerge because of this modeling choice:bribe size increasing in asymmetry
Makes welfare analysis hardoutcome can’t be rejected on efficiency grounds(Why is corruption bad?)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 3 / 7
When is cooperative bargaining the relevant concept?
Implications of NB solution:implements the efficient solutionsurplus shared equally
Some results emerge because of this modeling choice:bribe size increasing in asymmetry
Makes welfare analysis hardoutcome can’t be rejected on efficiency grounds(Why is corruption bad?)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 3 / 7
When is cooperative bargaining the relevant concept?
Low value cases (e.g. passports, doctor’s visits)equal bargaining power unlikelyextortion seems more relevant (and there’s a literature)
→ NB probably not so relevant
High value cases (e.g. building licenses/assessment of quality)longer term relationships, higher stakes, probably competition
→ NB more relevant
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 4 / 7
When is cooperative bargaining the relevant concept?
Low value cases (e.g. passports, doctor’s visits)equal bargaining power unlikelyextortion seems more relevant (and there’s a literature)
→ NB probably not so relevant
High value cases (e.g. building licenses/assessment of quality)longer term relationships, higher stakes, probably competition
→ NB more relevant
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 4 / 7
When is cooperative bargaining the relevant concept?
Low value cases (e.g. passports, doctor’s visits)equal bargaining power unlikelyextortion seems more relevant (and there’s a literature)
→ NB probably not so relevant
High value cases (e.g. building licenses/assessment of quality)longer term relationships, higher stakes, probably competition
→ NB more relevant
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 4 / 7
When is cooperative bargaining the relevant concept?
Low value cases (e.g. passports, doctor’s visits)equal bargaining power unlikelyextortion seems more relevant (and there’s a literature)
→ NB probably not so relevant
High value cases (e.g. building licenses/assessment of quality)longer term relationships, higher stakes, probably competition
→ NB more relevant
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 4 / 7
When is cooperative bargaining the relevant concept?
Low value cases (e.g. passports, doctor’s visits)equal bargaining power unlikelyextortion seems more relevant (and there’s a literature)
→ NB probably not so relevant
High value cases (e.g. building licenses/assessment of quality)longer term relationships, higher stakes, probably competition
→ NB more relevant
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 4 / 7
High value cases - Does the model fit reality?
Contract enforcable?delay between bribe and delivery, hold-upno legal protection obv, so needs to be self-enforcing, trust
Suggestion 1: Consider a dynamic gameAre contracts self-enforcing?Repeated interaction: Retaliation, Reputation
Suggestion 2: Consider very severe punishment (e.g. job loss)and rewards for whistle blowing
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 5 / 7
High value cases - Does the model fit reality?
Contract enforcable?delay between bribe and delivery, hold-upno legal protection obv, so needs to be self-enforcing, trust
Suggestion 1: Consider a dynamic gameAre contracts self-enforcing?Repeated interaction: Retaliation, Reputation
Suggestion 2: Consider very severe punishment (e.g. job loss)and rewards for whistle blowing
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 5 / 7
High value cases - Does the model fit reality?
Contract enforcable?delay between bribe and delivery, hold-upno legal protection obv, so needs to be self-enforcing, trust
Suggestion 1: Consider a dynamic gameAre contracts self-enforcing?Repeated interaction: Retaliation, Reputation
Suggestion 2: Consider very severe punishment (e.g. job loss)and rewards for whistle blowing
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 5 / 7
High value cases - Does the model fit reality?
Contract enforcable?delay between bribe and delivery, hold-upno legal protection obv, so needs to be self-enforcing, trust
Suggestion 1: Consider a dynamic gameAre contracts self-enforcing?Repeated interaction: Retaliation, Reputation
Suggestion 2: Consider very severe punishment (e.g. job loss)and rewards for whistle blowing
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 5 / 7
Which Policy Lessons to Draw?
Non-monotone outcome:Asymmetry may increase the bribe size and fail to eliminate briberywhen the cost of blowing the whistle is high and the effectivenessrelatively low.So it’s important to pick the policy just right, depending onparametersPick a schedule of fines and effort levels for detection for differentvalues of corrupt transactions
What if these parameters aren’t characteristics of theenvironment, but rather the individuals that meet?
→ Then we design a policy that works for some part of thedistribution, but not others.
→ In particular: Imagine poorer people cannot achieve the sameeffectiveness when reporting bribery. Then the same policy thateliminates bribes among the richer makes the poorer worse off(have to pay even higher bribes)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 6 / 7
Which Policy Lessons to Draw?Non-monotone outcome:
Asymmetry may increase the bribe size and fail to eliminate briberywhen the cost of blowing the whistle is high and the effectivenessrelatively low.So it’s important to pick the policy just right, depending onparametersPick a schedule of fines and effort levels for detection for differentvalues of corrupt transactions
What if these parameters aren’t characteristics of theenvironment, but rather the individuals that meet?
→ Then we design a policy that works for some part of thedistribution, but not others.
→ In particular: Imagine poorer people cannot achieve the sameeffectiveness when reporting bribery. Then the same policy thateliminates bribes among the richer makes the poorer worse off(have to pay even higher bribes)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 6 / 7
Which Policy Lessons to Draw?Non-monotone outcome:
Asymmetry may increase the bribe size and fail to eliminate briberywhen the cost of blowing the whistle is high and the effectivenessrelatively low.So it’s important to pick the policy just right, depending onparametersPick a schedule of fines and effort levels for detection for differentvalues of corrupt transactions
What if these parameters aren’t characteristics of theenvironment, but rather the individuals that meet?
→ Then we design a policy that works for some part of thedistribution, but not others.
→ In particular: Imagine poorer people cannot achieve the sameeffectiveness when reporting bribery. Then the same policy thateliminates bribes among the richer makes the poorer worse off(have to pay even higher bribes)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 6 / 7
Which Policy Lessons to Draw?Non-monotone outcome:
Asymmetry may increase the bribe size and fail to eliminate briberywhen the cost of blowing the whistle is high and the effectivenessrelatively low.So it’s important to pick the policy just right, depending onparametersPick a schedule of fines and effort levels for detection for differentvalues of corrupt transactions
What if these parameters aren’t characteristics of theenvironment, but rather the individuals that meet?
→ Then we design a policy that works for some part of thedistribution, but not others.
→ In particular: Imagine poorer people cannot achieve the sameeffectiveness when reporting bribery. Then the same policy thateliminates bribes among the richer makes the poorer worse off(have to pay even higher bribes)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 6 / 7
Which Policy Lessons to Draw?Non-monotone outcome:
Asymmetry may increase the bribe size and fail to eliminate briberywhen the cost of blowing the whistle is high and the effectivenessrelatively low.So it’s important to pick the policy just right, depending onparametersPick a schedule of fines and effort levels for detection for differentvalues of corrupt transactions
What if these parameters aren’t characteristics of theenvironment, but rather the individuals that meet?
→ Then we design a policy that works for some part of thedistribution, but not others.
→ In particular: Imagine poorer people cannot achieve the sameeffectiveness when reporting bribery. Then the same policy thateliminates bribes among the richer makes the poorer worse off(have to pay even higher bribes)
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 6 / 7
Thank you!
Jenny Simon (SITE) Discusion: Asymmetric Punishment August 31, 2015 7 / 7