Abstract
In this paper we study determinants of the level of certain types corruption in a society. To that end, we apply the simplest technique used in Evolutionary Game Theory, namely, the replicator dynamics with two types of agents, corrupted, and not corrupted. Through a learning interpretation of that technique, we obtain the main determinants of corruption are the initial proportion of corrupted people, and the relative pecuniary gain of being corrupted, relative to the pecuniary gain of being not corrupted. The model applies to all types of corruption for which the larger the number of corrupted people is, the larger the expected payoff of being corrupted will be.
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Notes
- 1.
This form of tax evasion may account for huge quantities of value. For instance, if the informal sector is of 25 % of GNP, and taxes are on average 30 % or 40 % for small firms, the tax evasion may account for at least between 7.5 % and 10 % of the GNP of a country. Estimates tell that, for instance, the informal economy in Spain is more than 22 %, and in Italy or Greece are more than 25 %. For countries in Africa, for instance Zimbabwe, the informal economy is more than 59 % of GNP. See, for these numbers and many others, Schneider (2002).
- 2.
Alternatively, we may assume a constant number of infinitely lived agents, who learn over time. The interpretation just proposed is, to our understanding, more realistic.
- 3.
A more rigorous argument is that having \(\lim _{t \rightarrow \infty } \rho (t)=\bar{\rho }\), thus \(\lim _{t \leftarrow \infty }\dot{\rho }(t)=0\), and therefore \(\bar{\rho }(1-\bar{\rho })\frac{(u_{C}(\bar{\rho })-u_{NC}(\bar{\rho }))}{ \bar{u}(\bar{\rho })}=0\). Hence, we must have \(\bar{\rho }=0\), as \(\bar{\rho }<\rho ^{*}<1\).
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Guerrero-Luchtenberg, C.L. (2016). Determinants of Corruption. In: León, R., Muñoz-Torres, M., Moneva, J. (eds) Modeling and Simulation in Engineering, Economics and Management. MS 2016. Lecture Notes in Business Information Processing, vol 254. Springer, Cham. https://doi.org/10.1007/978-3-319-40506-3_11
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DOI: https://doi.org/10.1007/978-3-319-40506-3_11
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