Experimental Economics: Cracking Down on Bribery

From a paper by Banuri & Eckel (December 2012):

Do crackdowns on bribery exacerbate corruption in the long run? In this paper, we observe the long-run impact of a short-term punishment institution (i.e. a crackdown) on bribery. We conduct lab experiments in two countries with cultures that differ in corruption norms, and have very different levels of bribery: US and Pakistan. Bribery is implemented in the laboratory as a repeated three-player sequential game, consisting of a firm, a government official and a citizen. The design consists of three phases: pre-crackdown, crackdown, and post-crackdown. Results show that, while the crackdown has an immediate effect on bribery, behavior returns to the pre-crackdown levels once enforcement is removed. Post-crackdown behavior is not significantly different from the pre-crackdown phase in either country. We conclude that crackdowns are largely ineffective in impacting behavior in the long run, and that sustained legal enforcement is necessary to constrain bribery, regardless of the norms that prevail in the society.