Public Choice

, Volume 137, Issue 1–2, pp 127–143 | Cite as

Correlated payoffs in the inspection game: some theory and an application to corruption

  • Tim Friehe


The inspection game as formulated by Tsebelis (Am. Polit. Sci. Rev. 83:77–91, 1989) has the counterintuitive implication that crime is unaffected by the magnitude of the penalty. This paper demonstrates that to attain this outcome, it is necessary to assume independence of enforcer and offender payoffs. Given correlated payoffs, the comparative statics of the equilibrium yield an inverse relationship between crime and the severity of the sanction. In an application, we enrich the framework of Tsebelis by adding corruption stages and show that this can imply such a correlation of payoffs. Another interesting finding is that harsher anticorruption measures can increase crime incentives.


Inspection game Crime Payoff correlation Corruption Incentives 

JEL Classification

K42 H00 C72 


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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Department of EconomicsEberhard Karls UniversityTübingenGermany

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