Asymmetric sanctions and corruption: Theory and practice in China

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Abstract Asymmetric punishment of partners in crime, intended to incentivize whistle‐blowing, may increase detection and deterrence. The idea is age‐old but its use against corruption is not frequent. We study a 1997 Chinese reform that strengthened such asymmetries for some forms of bribery. Using a game‐theoretic model and prosecution data, we show that combining leniency for both bribe‐givers and bribe‐takers can backfire by weakening incentives to report, and document a sharp decline in corruption prosecutions after the reform. Our findings suggest that the reform may have reflected increased tolerance for small bribes, and draw lessons for the design of anti‐corruption policies.