Cracking down on bribery

Abstract

Do crackdowns on bribery impact corrupt behavior in the long run? In this paper we observe the long-run impact of a short-term punishment institution (i.e., a crackdown) on bribery behavior in a lab setting. We conduct lab experiments in two countries with cultures that differ in corruption norms, and which experience very different levels of bribery: the US and Pakistan. Bribery is implemented in the laboratory as a repeated three-player sequential game, consisting of a firm, a government official and a citizen. The design contains three phases: pre-crackdown, crackdown, and post-crackdown. Results show that post-crackdown behavior is not significantly different from pre-crackdown behavior in either country. We conclude that short-term crackdowns may impact behavior in the short run, depending on the strength of the existing corruption norms in the country. More importantly, in our setting crackdowns are completely ineffective in the long run, as corrupt behavior rebounds to pre-crackdown levels.