Psychology has inspired economics to recognize intentions in addition to outcomes as being relevant for utility and behavior. Reciprocal behavior, in particular, has been related to the kindness of chosen actions and how kindness can be derived from the benefits obtained in unchosen...

The latest Argentinean debt restructuring was the first time the resolution of a modem financial crisis was completely handed over to the private financial markets without official intervention by public institutions. We argue that the resulting harshest haircut for private creditors in history...

The Transparency International Corruption Perceptions Index is a composite index with a focus on cross-section information. The usage of the data in the form of time series has been discouraged in the past, due to changes in the composition of sources. Basing assessments only on sources that...

Corruption among central banks induces distorted policies by, first, increasing the inflation bias and, second, potentially inducing a pro-cyclical adjustment of employment. In response to a negative supply shock a corrupt central banker is tempted to decrease money supply. In this case, he...

Recent empirical studies claim that, in addition to levels of corruption, investors are deterred by its unpredictability. I claim instead that it is petty corruption that deters investors. I employ seven subcomponents of corruption for a sample of 102 countries that appear in the 2003 Global...

The bank lending channel (BLC) has found entrance into standard economic textbooks. But the approach, as presented by Bernanke and Blinder [1988] operates with lopsided loan demand, money demand and money supply functions. This invalidates the idea that potential changes in the supply of loans...

Corrupt arrangements are characterized by a high risk of opportunism. Moreover, denunciation and extortion add another layer of uncertainty for participants in corrupt transactions. This paper demonstrates how legislators can use an asymmetric design of criminal sanctions to amplify these...

We let students play a corruption game, embedded into a variant of the ultimatum game. Those allotted the role of public servants chose between whistleblowing, opportunism and reciprocity by delivery (of a contract) and those acting as businesspeople chose how to frame the game and whether to...

This study embeds transaction cost analysis into a Law and Economics model to produce general recommendations on how to deter bribery. Governments may deter bribery either by high penalties and risks of detection, potentially supported by leniency given to those who report their infraction...