Theory suggests that capital is more likely to be efficiently allocated via market mechanisms, such as bank lending and stock issuance, than via non-market allocation. Consequently, we conjecture that increased market allocation of capital will enhance economic growth. We also posit that good...

We conducted an experimental analysis of the causes of corruption, varying the ease of hiding corrupt gains, officials’ wages, and the method of choosing the law enforcement officer. Voters rarely re-elect chief executives found to be corrupt and tend to choose presidents who had good luck....