The Distortionary Effects of Bribes

It is estimated that a trillion dollars are annually exchanged in bribes, distorting justice and economic efficiency. Understanding how bribes affect decision-making can help reducing instances of corrupt behavior. We investigate the factors that lead decision-makers to behave unethically in response to bribes. In a novel experiment, two participants compete for a prize; a referee picks the winner out of the two. Participants can bribe the referee. When the referee can keep only the winner’s bribe, bribes largely influence her decision. When the referee keeps the bribes regardless of the winner, bribes no longer distort her judgment. Our evidence suggests that participants are influenced by bribes out of greed, and not because of a desire to reciprocate. An extra-laboratory experiment in an Indian market confirms these results. In additional work, we investigate the role of self-deception in judgment distortion. We find that individuals are more likely to distort judgment in response to bribes when they have scope for convincing themselves that their behavior is ethical.