In the same way that the market supply and demand for a given good or service depend on individual supply and demand curves, corruption, while reflecting – and often reinforcing – broad, even systemic, institutional deficiencies within societies, also represents the amalgamation of the choices, priorities, and actions of individual actors. This paper argues that, in order to identify the social, economic, and political factors that contribute to the forms, magnitude, and character of corruption in a given context, it is critical to consider why and how individuals in that environment choose to act corruptly. It examines the complex, dynamic nature and causes of various forms of corruption by focusing on the conditions and incentives that either encourage or deter individuals from engaging in such illicit behaviors. Expanding on the rational choice model of criminal behavior, this paper considers how individuals assess expected costs and benefits when contemplating corrupt acts, including how heuristics and biases may produce predictable errors in perception, evaluation, and judgment that impact their ultimate decisions and behaviors. Recognizing the role of social factors in shaping individuals’ perceptions of both the magnitude and probability of related costs and benefits, it also analyzes the incidence of corruption as a frequency-dependent equilibrium. Specifically, it presents a dynamic, path-dependent model of corruption in which the decision of an individual to engage in such illicit behaviors is driven not only by her own personal experiences, values, and expectations, but also by her perceptions concerning the beliefs and behaviors of other members of her community. Interwoven throughout the paper are analyses of how such insights into individual decision-making can and should inform legal and non-legal initiatives to combat various forms of corruption
