A network-based rating system and its resistance to bribery

We study a rating system in which a set of individuals (e.g., the customers of a restaurant) evaluate a given service (e.g, the restaurant), with their aggregated opinion determining the probability of all individuals to use the service and thus its generated revenue. We explicitly model the influence relation by a social network, with individuals being influenced by the evaluation of their trusted peers. On top of that we allow a malicious service provider (e.g., the restaurant owner) to bribe some individuals, i.e., to invest a part of his or her expected income to modify their opinion, therefore influencing his or her final gain. We analyse the effect of bribing strategies under various constraints, and we show under what conditions the system is bribery-proof, i.e., no bribing strategy yields a strictly positive expected gain to the service provider

The complexity of bribery in network-based rating systems

We study the complexity of bribery in a network-based rating system, where individuals are connected in a social network and an attacker, typically a service provider, can influence their rating and increase the overall profit. We derive a number of algorithmic properties of this framework, in particular we show that establishing the existence of an optimal manipulation strategy for the attacker is NP-complete, even with full knowledge of the underlying network structure

Anti-Corruption as Strategic CSR: A Call to Action for Corporations

Corruption is not a peripheral social concern that corporations can ignore or passively address -- it is a bottom-line issue that directly affects companies' ability to compete. Widespread in emerging markets, corruption is becoming an increasingly important issue for business to address. Furthermore, it inflicts enduring harm on disadvantaged populations by diverting resources for critical services like education, clean water and health care into the pockets of dishonest public officials. This white paper presents a critical assessment of corporate anti-corruption efforts in the developing world and offers a guide for corporations to move beyond traditional ethics and compliance activities to strategic anti-corruption efforts. Sponsored by The Merck Company Foundation and developed in collaboration with the Ethics Resource Center, the paper reveals opportunities for corporations to engage in more comprehensive and effective anti-corruption reform as a business imperative

The organization of anticorruption: Getting incentives right!

Governments and private firms try to contain corruption among their staff mostly in a top-down, rules-based approach. They limit discretion, increase monitoring or impose harsher penalties. Principles-based, bottom-up approaches to anticorruption, instead, emphasize the importance of value systems and employee's intrinsic motivation. This embraces the invigorating of social control systems, encouraging whistle-blowing, coding of good practice and alerting to red flags. This paper investigates how some top-down measures run counter to bottom-up contributions. Examples range from penalties imposed with zero-tolerance, debarment or the nullity of contracts. While top-down elements are indispensable for containing corruption they must be designed well in order to avoid discouraging the bottom-up endeavors. --Corruption,whistle-blowing,contract penalties,debarment,nullity

Threats to auditor independence: Evidence from Iran

This paper aims to examine threats to auditor independence in Iran. A mixed questionnaire, including both quantitative closed-ended questions and an open-ended qualitative question, is developed to investigate threats to auditor independence. Moreover, thematic analysis is used to triangulate the results against financial media articles throughout 1994 – 2014. Findings suggest that while bribery, non-audit services, and economic condition are key threats to auditor independence in Iran, gifts and presents do not compromise independence given the Iranian culture. This study contributes to a better understanding of auditor independence in Iran, which may apply to other regional settings. Moreover, it provides some suggestions to improve the current Iranian Audit Organisation’s auditor independence framework. (JEL M32)N/