Community-Based Action to Fight Corruption

By Avinash Dixit (Princeton University)

How should a country fight corruption? Most people would answer that the government should make and enforce strong laws against it. But further thinking should show that this approach won’t get far. The politicians who make laws, and the officials who enforce them, all stand to benefit from the prevailing corrupt system. One cannot expect them to go against their strong self-interest. They will make weak laws with loopholes; their enforcement will be lax and itself riddled with corruption. At a minimum, formal legal avenues must be supplemented by participatory and organized efforts of the losers – citizens. Participatory because mere voting is not enough; even if a corrupt government is voted out, the new one will act with the implicit motto: “It is now our turn to eat”. Organized because any one citizen or firm is helpless when a politician or official demands a bribe, but collectively they have a lot of power. The question is how to harness it effectively.

This is a prisoners’ dilemma for consumers and businesses. If no one else is giving bribes, you improve your chances by bribery; if everyone else is complicit in bribery, you will only hurt yourself if you refrain. So bribery is the dominant strategy for all. But when everyone chooses it, in the aggregate they merely cancel one another’s actions and transfer money to politicians and officials. Social scientists have observed and theorized about numerous ways to resolve prisoners’ dilemmas using bottom-up, self-enforcing strategies. We can deploy this knowledge and experience to devise community-based action against corruption.

We know that successful collective action to resolve prisoners’ dilemmas requires: (1) a group with stable ongoing relationships, (2) common knowledge of what constitutes cooperation and cheating, (3) common knowledge of the sanctions to be imposed on cheaters, (4) good detection of cheating, (5) good communication of incidents of cheating to all participants, (6) incentives for members to take their designated action to punish a cheater.[1]

A business community can establish a “no bribery” norm and enforce it using the sanction that anyone found violating it would be ostracized by the others, which would cut him/her off from all the interactions – contracts, supply chains, finance and so on – that any business needs to function in today’s economies.

Let us see how this meets the desiderata listed above.[2]

(1) The community should have some organized structure such as a Chamber of Commerce, which a business is required to join in order to benefit from networking and trade relations, or be on a list qualified to bid for government business.

(2) Members must pledge not to attempt bribery to win any government contracts or licenses or to influence the decisions of regulators, legislators, and courts.

(3) Any member found violating the norm is subject to ostracism by others. This means cutting off business contacts, but can also include social ostracism if the Chamber has a social branch where the families of businesspeople meet. No one wants their spouses and children excluded from social activities of friends, so this threat can be very effective. But experience shows that sanctions should be graduated, not drastic ones triggered by small infractions; therefore violations especially by new and small members should be met first with warnings, and escalate to full ostracism only if they persist.

(4) The Chamber should have a good gossip network, and contacts with media and officials, that enable it to sniff out corruption, and a tribunal that can investigate suspicions or allegations of corruption. This can be supplemented by a more formal research unit that gives ratings to firms for their clean or corrupt behavior, similar to the Michelin star ratings for restaurants. It is extremely important to avoid false accusations, under severe penalties against anyone found making them. It is also important that the tribunal is not perceived as an insiders’ club that serves to exclude newcomers. A broad outside representation of respected senior retired businesspeople, public figures, media personnel, and academics should oversee the working of the tribunal.

(5) The name and picture of anyone convicted of violating the norms should be publicized widely, as done by the famous New York Diamond Merchants’ Club.[3]

(6) A system like the Honor Codes against cheating that exist in some universities, where refusing to report a violation is itself a violation requiring similar sanction, can create an incentive to take part in the ostracism of a convicted briber. But more than that: If A is ostracized by everyone and invites B to deal with him, B knows that A has nothing worse to fear by cheating in their interaction, and therefore that he must give up a bigger share of the available joint profit or rent to A to keep him honest. In other words, it is more costly to deal with a convicted briber than with someone who has a clean record.

The prisoners’ dilemma view of corruption can be supplemented by a coordination game.[4] Societies have two kinds of equilibria, one where everyone is corrupt and that is just an accepted state of affairs, and another with a clean culture where corruption is shameful and rare. How to shift from a corrupt to a clean equilibrium? Try harnessing the idealism of youth. Everywhere the young, especially the best educated and most enterprising, want their country to be modern and corruption-free. Other things reasonably equal, they prefer to work for, and buy from, firms with good governance and ethical behavior. A movement that channels these preferences into action can create an environment in which such clean firms attract the best talent, are favored by consumers, and therefore are more profitable; this builds momentum for more and more firms to eschew corruption. Indeed, such an organization is having some success in Sicily to fight the Mafia’s extortion; bureaucrats should be easier to counter.[5]

I am not claiming that such organizations or movements will successfully eliminate corruption everywhere, or quickly, or completely. But corruption is such an obstacle to development that even a little success is worth having. Nothing else has worked at all well. Waiting for a 100% effective solution only ensures getting 0% progress.[6]

Suggestions for further reading

Transparency International, (2016); The Benefits of Anti-Corruption and Corporate Transparency.  Working Paper #01/2016.

Mungiu-Pippidi, A. (2015); The Quest for Good Governance: How Societies Develop Control of Corruption. Cambridge University Press.

Basu, K., and T. Cordella (eds). (2018); Institutions, Governance, and the Control of Corruption, Palgrave Macmillan.


Bernstein, L., (1992); “Opting out of the legal system: Extralegal contractual relations in the diamond industry.Journal of Legal Studies, 21(1), 115–57.

Dixit, A., (2004); Lawlessness and Economics: Alternative Modes of Governance, Princeton University Press.

Dixit, A., (2017); “Fighting corruption by altering the equilibrium in an assurance game.” working paper, November 2017, available at

Dixit, A., (2018); “Anti-Corruption Institutions: Some History and Theory.” Published in K. Basu and T. Cordella, (eds.) Institutions, Governance, and the Control of Corruption, Palgrave Macmillan, pp. 15-49.

Dixit, A. and R. Mankar (2018); “New ideas for fighting corruption in India,” LiveMint, April 23, 2018, .

Dugatkin, L., (1999); Cheating Monkeys and Citizen Bees: The Nature of Cooperation in Animals and Humans, Harvard University Press, 1999

Greif, A., (2006); Institutions and the Path to the Modern Economy: Lessons from Medieval Trade, Cambridge University Press.

Jacobson, P., (2014); “Addiopizzo: The Grassroots Campaign Making Life Hell for the Sicilian Mafia,” Newsweek, September 17, 2014.

Ostrom, E., (2015); Governing the Commons: Evolution of Institutions for Collective Action, Cambridge University Press, Canto Classics reissue.

Superti, C., (2009); “Addiopizzo: Can a Label Defeat the Mafia?” Journal of International Policy Solutions, 11, Spring 2009 3-11.


[1] This list derives from studies and meta-analyses of many prisoners’ dilemmas of collective action: common resource pool problems (most notably Ostrom 2015), contract enforcement (for example Greif 2006, and Dixit 2004), and socio-biology (for example Dugatkin, 1999), to cite just a few.

[2] For more detailed arguments see Dixit (2018).

[3] See Bernstein (1992).

[4] A model with supporting evidence is in Dixit (2017).

[5] See Superti (2009) and Jacobson (2014).

[6] An OpEd offers a starter attempt to implement these ideas in India: Dixit and Mankar (2018).



Institutional and Organizational Analysis: Concepts and Applications

By Eric Alston (University of Colorado Boulder), Lee Alston (Indiana University Bloomington), Bernardo Mueller (University of Brasilia), and Tomas Nonnenmacher (Allegheny College, Pennsylvania)

Today, the notion that “institutions matter” is broadly accepted.  Scholars have generated a rich literature on the causes and effects of institutions spanning from the micro to the macro level. The pioneering work of Buchanan, Coase, North, Ostrom, Williamson, and many others is the fertile soil in which the literature in Institutional and Organizational Analysis (IOA) has taken root and blossomed. There is a wealth of institutional scholarship that now spans disciplines, decades, and continents. Our 2018 book with Cambridge University Press, Institutional and Organizational Analysis: Concepts and Applications, expands on many of the major contributions in this area, organized within a framework that explains both the effects and determinants of institutions and norms.

Our book is centered on the insight that institutions and norms are fundamental determinants of economic and political development. Institutions are rules that recognized authorities create, and choose whether or not to enforce. Norms are long-standing patterns of behavior, shared by a subset of people in a society or organization. Institutions and norms play a role in all organizations, including governments, firms, churches, universities, gangs, and even families. In our book, we (1) present a set of concepts—for example, institutions, norms, property rights, and transaction costs—used in IOA that link institutions and norms to economic performance; (2) use the same set of concepts to better understand political organizations and performance; and (3) build a framework based on those concepts for understanding divergent developmental trajectories of nations around the world. In Parts I and II, we define the concepts needed to understand how economic activity is organized and how institutions and norms shape economic and political outcomes. In Part III, we add the comparatively recent work on beliefs and leadership to better understand the fundamental question of why there has not been convergence in economic and political performance across countries. In the following paragraphs, we summarize the three parts of our book in greater detail, which is intended as a useful reference for advanced students and scholars alike.

In Part I of the book, we link institutions to property rights, transaction costs, and economic performance. In Chapter 1, we examine how institutions and norms shape property rights. Property is a social construct; that is, property rights define our ability to use different aspects of an asset. In Chapter 2, we define transaction costs as the costs of “transfer, capture, and protection” of property rights. Transaction costs are a key determinant of organizational and contractual choice. In Chapter 3, we analyze how different types of transaction costs shape the structure of contracts and organizations. The price mechanism and hierarchies can be thought of as endpoints on a spectrum of contractual choices, and we provide a theoretical justification for and examples of different intermediary forms.

In Part II, we explain the determinants of institutions taking as fixed the basic constitutional rules and current economic performance. In the four chapters, we analyze the process through which groups and individuals lobby and government supplies laws and regulations. In Chapter 4, we address the role and impact of interest groups on government policy. Every policy is potentially redistributive, so firms and individuals organize to influence redistribution in their favor. In Chapter 5, we assess the roles of the legislature and the executive as the organizations in charge of creating and implementing legislation. In Chapter 6, we address the role of the bureaucracy and its impacts on the content, quality, and effectiveness of the outcomes of laws. In Chapter 7, we analyze how institutions can influence the structure and output of the judiciary. We also examine the impact that judiciaries have on institutions and norms.

Simple economics suggest that countries should have converged in terms of economic and political development. Moreover, scholars in the IOA have spilled a lot of ink in showing the socially beneficial institutions that accompany development. But despite an increasingly well-known institutional template, countries have not converged in terms of economic and political development and, in many cases, have outright declined. A number of explanations to this puzzle have emerged: (1) it is not in the interest of those in power to have economic and political development; (2) poorer countries have not converged because the volatility of their growth rates means such economies are as likely to shrink as grow; and (3) a change in fundamental core beliefs about how institutions affect outcomes is required to break out of the status quo. In Part III, we discuss the role of core beliefs and leadership in bringing about changes to constitutional-level institutions. Though we do not directly analyze culture or ideas as a determinant, we recognize their importance as background conditions that determine which belief changes take place. We stress leadership for its coordinative function within a dominant network that is negotiating how to respond to either an existing shock or a foreseeable crisis that could be attenuated or avoided, provided sufficient institutional change occurs.

Further, we identify fruitful avenues for research within each of our referential frames of institutional and organizational analysis, from the economic to the political to the constitutional. Our text provides useful background for the future areas of research we suggest by laying out many of the foundational contributions of the emerging discipline. It is our hope that the text will serve as a resource in helping to define the still emerging field of IOA. Our book is relevant for advanced undergraduates, as well as a valuable reference for graduate students and scholars. The analysis of the emergence and evolution of complex rule sets has proven to be one of the most illuminating areas of economic study over the course of the past century, and we accordingly describe how much more we think the field has to contribute.

Call for Papers: 14th Australasian Trade Workshop School of Economics, Finance and Marketing RMIT University, Melbourne, Australia

23 – 24 March (Sat – Sun), 2019

The School of Economics, Finance and Marketing at RMIT University will host the 14th Australasian Trade Workshop (ATW) on 23-24 March 2019. We are pleased to announce that the keynote speakers for this year will be John McLaren (Virginia) and Emanuel Ornelas (Sao Paulo).

We invite colleagues in this field (JEL-Classification F0 to F2) to
submit papers for presentation at the workshop. If you are interested,
please send your abstract or preferably your complete paper (in .pdf
format) to .

The deadline for submissions is November 1, 2018.

Conference participants are expected to serve as discussants at the
workshop. There is no registration fee. Unfortunately we are unable to
offer financial assistance to participants. Upon acceptance, you will be
asked to book your travel and accommodation independently.

If you have any further questions about the workshop, please e-mail
Bilgehan Karabay at .


Permanent ATW webpage:

Local ATW 2019 webpage:

PhD scholarships at the Department of Economics, University of Copenhagen (UCPH)

Applications are invited for PhD scholarships at the Department of Economics, UCPH. The chosen candidates will enrol at the Faculty of Social Sciences under Copenhagen Graduate School of Social Sciences. Employment is to begin on 1 February 2019.
Deadline for applications: 1 November 2018. 
The PhD programme provides PhD students with strong research training which opens up a window of opportunity to research careers, and a variety of careers within the private and public sectors. The programme includes the drafting of a PhD thesis, active participation in research networks, PhD courses, teaching, and other forms of knowledge dissemination. The PhD programme can be undertaken as a three year full-time study within the framework of the 5+3 study programme, or as a four year full-time study programme within the framework of the 4+4 study programme.
Further information about the PhD study programme is available on the website of Copenhagen Graduate School of Social Sciences:
Under “Legal basis” on the website you will find information about the rules and guidelines for the PhD programme, and the Danish Ministerial Order on the PhD Programme at the Universities.
Applicants should familiarise themselves with the research strategy and the ongoing research at the Department before submitting their application. Further information can be found:
Further information about the PhD study programme in Economics will be available at an orientation meeting on 5 October 2018 at 9.00 AM at the Centre for Health and Society, Øster Farimagsgade 5, 1353 Copenhagen K, Department of Economics, Building 26, 2nd floor, room 26.2.21. (The Big Seminar Room) Further information: 
  • The University of Copenhagen wishes to reflect the surrounding society, and invites all qualified applicants, regardless of personal background, to apply for the positions.
  • In order to be awarded a PhD scholarship the applicant has to enrol as a PhD student at the Faculty of Social Sciences, cf. the rules of the Danish Ministerial order No 1039 of 27 August 2013.
  • Please note that normally there is strong competition for these scholarships, and only a few can be awarded each term.
The application must be submitted electronically using the APPLY NOW button below, and must include:
  • Cover Letter detailing your motivation and background for applying for the specific PhD project
  • Project description (no more than 12,000 keystrokes not including bibliography)
  • CV
  • Diploma and transcripts of records (BSc and MSc)
  • Time schedule
  • Budget
  • Other information for consideration, e.g. list of publications, documentation of English language qualifications (if any)
Please note that it is only possible to upload one document per attachment category. If more than one document has to be uploaded in the same category, please make sure that they are scanned and collected into one file. 
Scholarships in the 5+3 and the 4+4 PhD study programmes 
The 5+3 PhD study programme 
In order to be eligible for a scholarship in the 5+3 PhD study programme the applicant must have completed a two year MSc degree programme, or have earned 120 ECTS credits at an equivalent academic level before starting his or her employment. Applicants should check the study programmes for more detailed descriptions of the entry requirements. PhD students are paid a salary in accordance with the agreement between the Ministry of Finance and the Danish Confederation of Professional Associations (AC). The salary is about DKK 25,000 per month. The PhD student has a work obligation of up to 840 hours over the 3 year period of time without additional pay. The work obligation can include for instance teaching.
The 4+4 PhD study programme 
Students who have completed a BSc plus 60 ECTS of an MSc degree programme would enrol as PhD students simultaneously with their enrolment in the MSc degree programme. Applicants should check the study programmes for more detailed descriptions of the entry requirements. Until an MSc degree is obtained, the grant is paid partly in the form of up to 48 state education grant portions (in Danish: SU-klip). This SU salary amounts to about DKK 12,000 per month. More specifically the PhD student will be paid two grant portions per month plus salary for work (teaching, presentations etc.) which totals a workload of at least 280 hours. Payment and conditions of employment are carried out in accordance with the agreement between the Ministry of Finance and the Danish Confederation of Professional Associations (AC). Upon completion of the MSc degree the student is transferred to the salary-earning part of the PhD studies.
For foreign applicants it is important to note that both taxes and living expenses are high in Copenhagen.
Application process
On the website of Copenhagen Graduate School of Social Sciences you will find a time schedule for the application process, and information about enclosures to include with your electronic application:
The application must be submitted electronically no later than 1 November 2018. 
After the expiry of the deadline for applications, the authorized recruitment manager selects applicants for assessment on the advice of the Appointment Committee. All applicants are then immediately notified whether their application has been passed for assessment by an expert assessment committee.
The following criteria are used when shortlisting candidates for assessment:
1. Research qualifications as reflected in the project proposal.
2. Quality and feasibility of the project.
3. Qualifications and knowledge in relevant Economics disciplines.
4. Performance (grades obtained) in graduate and post-graduate studies.
5. Department of Economics can offer adequate supervision for the research topic in question.
Selected applicants are notified of the composition of the assessment committee, and each applicant has the opportunity to comment on the part of the assessment that relates to the applicant him/herself. You can read about the recruitment process at 
Applications sent by regular mail or by email or received after the deadline will not be taken into account.

Tenure-Track, Assistant Professor in International Development and Economic Policy Texas A&M University – College Station

The Department of International Affairs in the Bush School of Government and Public Service at Texas A&M University invites applications and nominations for a tenure-track, assistant professor position in the broad area of International Development and Economic Policy. We are open to the candidate’s area of expertise, which may include development economics, politics and institutions of developing countries, international political economy, comparative political economy, and other relevant areas. We welcome applicants with different regional expertise, with a preference for those focusing on Latin America. The successful candidate is expected to have a strong research portfolio commensurate with their academic trajectory, and teach at least one section of the required course in introductory-level quantitative methods and an intermediate quantitative methods course. Bush School faculty exclusively teach master’s degree graduate students in international affairs in a standard 2-2 load. Additional information about the Bush School and department is available at

Applicants must have a Ph.D. in Political Science, Economics, or Public Policy by September 2019. The individual selected will demonstrate a strong commitment to teaching and research in the context of a public policy graduate school environment. The start date for this position will be September 1, 2019.

Applications must be made through the Texas A&M Workday website. Applicants who currently are not a Texas A&M System employee please go to our external career site at
Applicants who currently are a Texas A&M System employee please go to our internal career site at

Applicants should upload a formal letter of interest that includes reference to the position, a curriculum vitae and a sample of written work. Additionally, please have three letters of recommendation sent to:

Professor Gregory Gause
c/o Ms. Janeen Wood (preferably as electronic attachments to )
The Bush School of Government & Public Service
Texas A&M University

The University of Sydney Fellowships – International Economics

  •    Opportunity for outstanding early career researchers in any discipline or research area (10 positions available)
    •     Holders of the Fellowships will be lifetime members of the Sydney Society of Fellows
    •     Full time, 3 year fixed term, salary AUD98,940 p.a, plus up to 17% superannuation and leave loading

    The University of Sydney Fellowships aim to attract outstanding early career researchers to contribute to and enhance the research strengths and culture of the university. Holders of the Fellowships will be lifetime members of the Sydney Society of Fellows. The society fosters inter-faculty collaboration, builds on a network of outstanding international alumni and provides further career development opportunities.

    Applications are encouraged from any discipline or research area, with recipients able to work with our leading Faculties, schools and centres as well as with one of our 10 whole-of-university multidisciplinary initiatives that are focused on some of the greatest challenges of our time:

    •     Charles Perkins Centre
    •     Brain and Mind Centre
    •     Sydney Nano
    •     China Studies Centre
    •     Sydney Southeast Asia Centre
    •     Cancer Research Network
    •     Sydney Environment Institute
    •     Marie Bashir Institute for Infectious Diseases and Biosecurity
    •     Centre for Translational Data Science
    •     Sydney Policy Lab

    Further information about the University’s research strategy, including our commitment to multidisciplinary research, can be found in the University’s Strategic Plan 2016-20.

    Eligibility for Fellowship Scheme 2019

    1.     All applicants must have a PhD award dated no earlier than 1 January 2013 and no later than 19 August 2018. PhD award/conferred date is defined as the date on the testamur.
    2.     All applicants must obtain the endorsement of a proposed University of Sydney supervisor before applying.
    3.     Strong preference will be given to applicants seeking to join the University from another organisation in Australia or from overseas. However, applicants currently employed at the University of Sydney or other affiliated institutions (including medical research institutes) who commenced such employment after 1 July 2017 are eligible to apply.
    4.     Applicants with a PhD awarded by the University of Sydney may only apply if they have held a paid position with another organisation subsequent to the award of their PhD.

    Career interruption

    Candidates awarded their PhD after 1 January 2010 who have had a period of significant career interruption (3 months or more is considered significant in this context) will have their eligibility considered.

    Assessment Criteria

    There are two essential criteria.

    1.     Research excellence will be a primary criterion, both in terms of the project quality, innovation and feasibility and the track-record and potential of the researcher (relative to opportunity).
    2.     The alignment of the proposed research (by the applicant) with the University’s agenda of excellence and multidisciplinary research (both with the initiatives listed above and more broadly).

    For full information regarding the fellowships, application requirements and to apply click here.

    CLOSING DATE: 11.30pm Sydney time, Sunday 19 August 2018

    Late applications will not be accepted


  • EEO/AA Policy

We are committed to diversity and social inclusion. We welcome applications from women (particularly for senior and non-traditional roles), Aboriginal and Torres Strait Islander people, people with a disability, people who identify as LGBTIQ, and people from culturally and linguistically diverse backgrounds.

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