Corruption and externalities: Assessing the role of intentions

Abstract

Experimental studies model corruption as reciprocal behavior that generates negative externalities for third parties. Results on how negative externalities factor in individuals’ corruption-related decisions have been mixed. While (imputed) intentions have been proven to have an impact on participants’ social preferences and kindness evaluations in a wide array of situations, little is known about whether and how the (imputed) intentions of third parties may enter participants’ deliberation in corruption contexts. The assumed differential evaluation of externalities according to whether they are borne by active players or dummy players has important implications for real-life corruption. In many instances of corruption negative externalities are indeed incurred by (sets of) ‘dummy players’, such as ‘society at large’. In other cases, however, more active players (such as the political head of a governmental department) are the target of negative externalities. Reciprocity models would predict that kindness evaluations concerning third parties would enter the considerations of partners to the corrupt transaction in the latter but not the former case. This important prediction, however, has not been empirically tested. We find that intentions of third parties do not affect behavior, but affect how kind individuals are perceived by others.