Corruption, Collective Action, and the Law: A Game-Theoretic Formulation

The paper conceptualizes corruption as both a principal-agent problem and a collective action one but focuses on the latter. In this context, it identifies “an environment free of corruption” as a global public good, which is under-produced. The scholarship relates this inefficiency, especially in settings of deeply rooted or systemic corruption, to problems of cooperation, namely the free-rider behavior (prisoner’s dilemma game) and coordination (assurance game). Game theory provides valuable insights to understand the strategic interactions that lead to problems of collective action associated with corruption. Scholars have suggested possible solutions, such as integrity pacts to secure public procurement, voluntary certification, and more theoretically, community-based structures of norms, control, and sanctions. With this theoretical framework, the article seeks to identify how the law can help create an environment favorable to cooperation and, by that, positively affect the level of corruption, contributing to achieve and preserve the “good” equilibrium.