Corruption and Public Display of Wealth∗
نویسندگان
چکیده
We build a principal-agent-client model of corruption, allowing for heterogeneity of the value of public projects relative to the cost of monitoring their virtuous execution. In an environment in which potential corruptors face uncertainty about the type of project followed by officials, we show under which conditions officials with low-value projects have an incentive to signal their project’s type – and thereby their corruptibility – by means of public display of wealth. We then show that, even though public display of wealth by those officials reduces the offer of bribes to officials following high-value projects, in equilibrium government is better off inhibiting it.
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