Abstract
This paper uses game theoretic approach to analyse whether a bribe giver in case of ‘harassment’ bribes needs to be penalized or immunized by law. Various complexities in this issue are addressed by considering three different scenarios: a scenario in which bribe taking official is assumed to surely perform the concerned work for which bribe is paid, a scenario where bribe taker does or does not do the work and a scenario in which the government or anti-corruption unit is considered as the third player in the game. This paper introduces the relevance of transaction costs and enforcement mechanisms while analysing legal issues related to combating corruption. This framework could be used to introduce issues related to corruption in intermediate courses on microeconomics, game theory, and economic development.
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