Panel Data Analysis of the Time-Varying Determinants of Corruption

There is a long history of models attempting to identify the causes of corruption, yet empirical analysis is complicated. Not only is data difficult to obtain and often available only for few countries and a limited number of years, but such estimation involves inherent complexities. This paper focuses on the use of panel data techniques to better identify factors that affect bureaucratic corruption. Furthermore, this paper identifies an endogeneity problem which arises in the analysis of the causes of corruption, and a new instrumental variable is proposed to solve it. To help in this endeavor, a data set is employed which provides information for as many as 135 countries over a span of sixteen years. Results show that neglecting the endogeneity problem leads to severely biased results. Using panel data techniques reveals that the availability of rents is a crucial determinant of corruption and that previous research may have underestimated the economic significance of rents on corruption. Furthermore, corruption is shown to be procyclical. Depuis longtemps, des modèles sont utilisés dans le but de déterminer les causes de la corruption. Toutefois, l’analyse empirique demeure complexe. Qui plus est, les données sont difficiles à recueillir et couvrent souvent un nombre restreint de pays et une période limitée. Ce genre d’évaluation présente aussi des complexités inhérentes. Le présent document met l’accent sur le recours à des techniques de données de panels dans le but de mieux connaître les facteurs qui influent sur la corruption bureaucratique. En outre, cette analyse souligne le problème d’endogénéité qui ressort de l’analyse des causes de la corruption et propose une nouvelle variable instrumentale permettant de contrer celui-ci. Pour faciliter la démarche, ce document utilise un ensemble de données fournissant des renseignements sur au moins 135 pays et pour une période de seize ans. Les résultats indiquent que si le problème d’endogénéité n’est pas pris en compte, les résultats sont sérieusement biaisés. De plus, la corruption est décrite comme étant procyclique.corruption, endogeneity, income, rents, corruption, endogénéité

Pork Versus Public Goods: An Experimental Study of Public Good Provision Within a Legislative Bargaining Framework

We experimentally investigate a legislative bargaining model with both public and particularistic goods. Consistent with the qualitative implications of the model: there is near exclusive public good provision in the pure public good region, in the pure private good region minimum winning coalitions sharing private goods predominate, and in the "mixed" region proposers generally take some particularistic goods for themselves, allocating the remainder to public goods. As in past experiments, proposer power is not nearly as strong as predicted, resulting in public good provision decreasing in the mixed region as its relative value increases, which is inconsistent with the theory

Co-operation in the finitely repeated prisoner’s dilemma

More than half a century after the first experiment on the finitely repeated prisoner’s dilemma, evidence on whether cooperation decreases with experience–as suggested by backward induction–remains inconclusive. This paper provides a meta-analysis of prior experimental research and reports the results of a new experiment to elucidate how cooperation varies with the environment in this canonical game. We describe forces that affect initial play (formation of cooperation) and unraveling (breakdown of cooperation). First, contrary to the backward induction prediction, the parameters of the repeated game have a significant effect on initial cooperation. We identify how these parameters impact the value of cooperation–as captured by the size of the basin of attraction of Always Defect–to account for an important part of this effect. Second, despite these initial differences, the evolution of behavior is consistent with the unraveling logic of backward induction for all parameter combinations. Importantly, despite the seemingly contradictory results across studies, this paper establishes a systematic pattern of behavior: subjects converge to use threshold strategies that conditionally cooperate until a threshold round; and conditional on establishing cooperation, the first defection round moves earlier with experience. Simulation results generated from a learning model estimated at the subject level provide insights into the long-term dynamics and the forces that slow down the unraveling of cooperation

Session Effects in the Laboratory

En économie expérimentale où les sujets participent à différentes sessions, les observations peuvent être plus corrélées à l'intérieur d'une même session qu'entre les participants ayant participé à différentes sessions. Ce type d'effet est présent également dans plusieurs autres domaines, autant expérimentaux que non-expérimentaux. Cette étude tente de mettre en lumière quelles sont les sources du problème et propose un ensemble de tests pour déterminer s'il y a ou non présence de corrélation intra-session dans une collecte de données, et pour identifier l'effet d'un traitement lorsque ce problème est présent. Des simulations ont été effectuées pour évaluer la performance de ces tests sur des échantillons avec peu d'observations, ce qui est commun lors de la collecte de données de type expérimental.In experimental economics, where subjects participate in different sessions, observations across subjects of a given session might exhibit more correlation than observations across subjects in different sessions. The problem of session effects is related to similar problems in many experimental and non-experimental fields. This paper attempts to clarify what the issues are and proposes a set of practical tests to identify the problem as well as ways to test for treatment effects in the presence of session-effects. Simulations are used to assess how these tests perform given the relatively small samples typical of experimental data sets

Learning in a multilateral bargaining experiment

This paper analyzes data from an investigation of a majoritarian bargaining experiment. A learning model is proposed to account for the evolution of play in this experiment. It is also suggested that an adjustment must be made to account for the panel structure of the data. Such adjustments have been used in other fields and are known to be important as unadjusted standard errors may be severely biased downward. These results indicate that this adjustment also has an important effect in this application. Furthermore, an efficient estimator that takes into account heterogeneity across players is proposed. A unique learning model to account for the paths of play under two different amendment rules cannot be rejected with the standard estimator with adjusted standard errors, however it can be rejected using the efficient estimator. The data and the estimated learning model suggest that after proposing "fair" divisions, subjects adapt and their proposals change rapidly in the treatment where uneven proposals are almost always accepted. Their beliefs in the estimated learning model are influenced by more than just the most recent outcomes.Learning Bargaining Estimation Hypothesis tests

Strategy choice in the infinitely repeated prisoners dilemma

www.wzb.eu Copyright remains with the authors. Discussion papers of the WZB serve to disseminate the research results of work in progress prior to publication to encourage the exchange of ideas and academic debate. Inclusion of a paper in the discussion paper series does not constitute publication and should not limit publication in any other venue. The discussion papers published by the WZB represent the views of the respective author(s) and not of the institute as a whole. Affiliation of the authors

Frictions in a Competitive, Regulated Market: Evidence from Taxis

This paper presents a dynamic equilibrium model of a taxi market. The model is estimated using data from New York City yellow cabs. Two salient features by which most taxi markets deviate from the efficient market ideal are, first, matching frictions created by the need for both market sides to physically search for trading partners, and second, regulatory limitations to entry. To assess the importance of these features, we use the model to simulate the effect of changes in entry, alternative matching technologies, and different market density. We use the geographical features of the matching process to back out unobserved demand through a matching simulation. The matching function exhibits increasing returns to scale, which is important to understand the impact of changes in this market and has welfare implications. For instance, although alternative dispatch platforms can be more efficient than street-hailing, platform competition is harmful because it reduces effective density. (JEL C78, L51, L84, L92, L98, R48)National Science Foundation (Grant SES-1558857