Rational Choice Theory and Demand for Petty Corruption

Abstract

Corruption is one of the biggest economic problems across nations. Better understanding of corruption can be useful for formulating better anti-corruption policies. This research studies corruption as a rational choice phenomenon. Unlike widespread game-theory approach to explaining corrupt behavior, this paper attempts to describe corruption as continuous utility-maximizing problem. It comes up with demand for corruption function, which shows how the readiness of a rational person to accept corrupt income depends on several factors such as official wage rate, severity of punishment, awareness of those penalties, probability of being detected and probability of being prosecuted.