Bribery and Public Procurement–An Experimental Study–

A procurement contract is granted by a bureaucrat (the auctioneer)who is interested in a low price and a bribe from the provider.The optimal bids and bribes are derived based on an iid private costassumption. In the experiment, bribes are negatively framed (betweensubjectstreatment) to capture that society is better off if bribes arerare or low. Although bids are lower than predicted, behavior is qualitativelyin line with the linear equilibrium prediction. When bribesgenerate a negative externality, there is a significant increase in thevariability of the data.