The anatomy of corruption: the practice of pension fund trustee decision-making

The model of pension plan trustee decisionmaking introduced in a previous paper is extended here emphasising aspects of the social psychology of investment decisionmaking, including collegiality and the necessity of justification. To give the analysis structure, I begin with the framing logic of Kahneman and Tversky and introduce three different frames structuring decisionmaking, starting with the 'weapons of influence', the 'strategies of justification', and, finally, the 'emotions of relationships'. The focus of the paper is on how and why corruption occurs in trustee decisionmaking, especially concerning community development projects. Implications are drawn from the model of corruption for current debate over the proper scope of regulation. It is argued that the current system of trust law and case-by-case adjudication is inadequate in the face of the systematic nature of corruption and the potential harm occasioned by corrupt trustee decisionmaking. It is also argued that the model of corruption sketched in this paper can be applied to a wide range of investment decisions, not just community development projects (the initial reference point for the paper).