Law Enforcement and Corruption Behaviour: An Experimental Approach

One form of corruption in the enforcement process is bribery, in which an enforcer accepts a payment in return for not reporting a violation. In this paper, we use laboratory data to perform an empirical investigation of individual behaviour in two different law enforcement schemes. For this purpose we focus on the experiment of Finocchiaro (2006). The first treatment pictures a situation in which an enforcer and an agent are at play. In the second treatment a skcond monitoring enforcer enters the game. Our econometric analysis investigates, thus, the determinants of the different levels of corruption reached when the two enforcement schemes are implemented in the laboratory. The empirical results show that, on average, the presence of a second monitoring enforcer increases the levels of corruption and that in a corrupt society being corrupt as well is the individual's best reply. In addition, our Panel data analysis turns out to be much richer of insights than the session level analysis usually run on experimental data.