TY  - JOUR
AU  - Banerjee,Abhijit
AU  - Mullainathan,Sendhil
AU  - Hanna,Rema
TI  - Corruption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17968
PY  - 2012
Y2  - April 2012
UR  - http://www.nber.org/papers/w17968
L1  - http://www.nber.org/papers/w17968.pdf
N1  - Author contact info:
Abhijit Banerjee
MIT
Department of Economics
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8855
Fax: 617/253-1330
E-Mail: banerjee@mit.edu

Sendhil Mullainathan
Department of Economics
Littauer M-18
Harvard University
Cambridge, MA  02138
Tel: 617/496-2720
Fax: 617/495-7730
E-Mail: mullain@fas.harvard.edu

Rema Hanna
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-1140
Fax: 617/496-5747
E-Mail: Rema_Hanna@hks.harvard.edu
AB  - In this paper, we provide a new framework for analyzing corruption in public bureaucracies.  The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place.    Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control.  This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task.  We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.
ER  -