Bribery, Regulators, and Firms: Corruption in the S & L Industry, 1982-1989
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1992
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Abstract
"A bribe is anything, usually money, offered to someone to do something illegal. This paper builds a simple 2-player, 2-sided incomplete information game with bribery as one of its strategic possibilities. The paper then solves the game using all dominant strategies available at equilibrium. There is a nondegenerate subset of the parameter space where all firms in financial difficulty offer bribes to their regulators, and all dishonest regulators accept these bribes. The model is applied to developments in the Savings & Loan industry of the United States, 1982-89."
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Keywords
Workshop, game theory, firm--theory, regulation, corruption