Accessible Requires Authentication Published by De Gruyter September 18, 2019

How Do Intermediaries Affect the Effectiveness of the Four-Eyes-Principle? An Experimental Investigation

Liangcong Fan, Zechun Ying, Yuemei Yuan, Xinchao Zhang and Bin Xu

Abstract

Corrupt deals are commonly arranged by intermediaries. However, attempts to deter corruption pay little attention to the role of intermediaries in corrupt deals. This paper reports a laboratory bribery experiment on corruption designed to investigate how intermediaries with information about the lowest bribe that the official is willing to accept in a briber-initiated corrupt deal affect the effectiveness of the four-eyes-principle (FEP) on deterring corruption. We find that the introduction of the FEP significantly decreases the corruption level by increasing uncertainty. However, the presence of intermediaries with information completely offsets the positive effect of introducing the FEP on preventing corruption. Our findings suggest that further research on corruption should allow a more active role of intermediaries, and legislators should take the role of intermediaries into account when designing anti-corruption mechanisms.

JEL Classification: C91; D73; K42

Acknowledgements

This study was supported by Collaborative Innovation Center of Judicial Civilization of China, National Science Foundation of Zhejiang Province (Grant No.: LY18G030012), Funding for Humanities and Social Sciences Planning Projects of the Ministry of Education (Grant No.: 18YJA790092), the Zhijiang Youth Grant of Zhejiang Province (Grant No.: G228), the Fundamental Research Funds for the Central Universities, and the Special Fund of Social Science and Humanity of Zhejiang University. We would like to express our great appreciations to the two anonymous referees and Prof. Till Requate for their comments and valuable suggestions on the previous versions of our manuscript.

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Published Online: 2019-09-18

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