In environments where regulations are lax and controls function badly, cleanly participating in tenders is irrational. An increase in one single firm’s propensity to bribe induces the same behaviour upon the others (“bad apple effect”), and the likelihood of firms to bribe tends to...

This note examines the Integrity Pact (IP) methodology proposed by Transparency International to confront the problem of corruption in public procurement. The examination draws from a decision model for participants developed elsewhere, in which the critical elements are shown to be the...

The prisoner’s dilemma is sometimes invoked to describe the situation facing participants in tenders. Reasoning on the basis of the dilemma metaphor, it is contended that agreeing not to bribe public officials in order to win contracts (collaboration) leads to better outcomes than bribing...

We propose a dynamic general equilibrium model with human capital accumulation to evaluate the economic consequences of compulsory services (such as military draft or social services). Our analysis identifies a so far ignored dynamic cost arising from distortions in time allocation over the...

A number of papers in the theoretical auction literature show that the release of information regarding the seller’s valuation of an item can cause bidders to bid more aggressively. This widely accepted result in auction theory remains largely untested in the empirical literature. Recent...

Reference: Challenge, January/February, 1979

This paper considers an economy where groups compete in a contest for power to redistribute future income in their favor. An increased external threat of terrorism--either an increase in the likelihood of a successful terrorist attack or a greater loss of income in the event of a successful...

Recent contributions to the economics of terrorism have given contradicting recommendations for campaigning against terrorism, from the proposal to deprive terrorists of their resources to the proposal of raising the opportunity costs of terrorism by increasing the wealth of the affected...

Post-conflict situations face a high risk of reversion to conflict. We investigate the effect of military expenditure by the government during the first decade post-conflict on the risk of reversion. We contrast two theories as to the likely effects. In one, military spending deters conflict by...

We investigate the causes of civil war, using a new data set of wars during 1960-99. We test a `greed’ theory focusing on the ability to finance rebellion, against a`grievance’ theory focusing on ethnic and religious divisions, political repression and inequality. We find that greed...