Review of Behavioral Economics > Vol 7 > Issue 2

Can Shorter Transfer Chains and Transparency Reduce Embezzlement?

Salvatore Di Falco, University of Geneva, Switzerland, salvatore.difalco@unige.ch Brice Magdalou, University of Montpellier, France, brice.magdalou@umontpellier.fr David Masclet, University of Rennes, France, david.masclet@univ-rennes1.fr Marie Claire Villeval, University of Lyon, France and IZA, Bonn, Germany, villeval@gate.cnrs.fr Marc Willinger, University of Montpellier, France, marc.willinger@umontpellier.fr
 
Suggested Citation
Salvatore Di Falco, Brice Magdalou, David Masclet, Marie Claire Villeval and Marc Willinger (2020), "Can Shorter Transfer Chains and Transparency Reduce Embezzlement?", Review of Behavioral Economics: Vol. 7: No. 2, pp 103-143. http://dx.doi.org/10.1561/105.00000119

Publication Date: 28 May 2020
© 2020 S. Di Falco, B. Magdalou, D. Masclet, M. C. Villeval, and M. Willinger
 
Subjects
Law and Economics,  Behavioral Decision Making
 
Keywords
JEL Codes: C91, D73, O19
EmbezzlementCorruptionDonationsTransparencyExperiment
 

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In this article:
1. Introduction
2. Literature Review
3. Experimental Design and Procedures
4. Results
5. Discussion and Conclusion
Appendix 1. Instructions
Appendix 2. The experimental settings
Appendix 3. Tables
Appendix 4. Mean percentage of the amount received that is embezzled, by category of amount received, treatment and rank in the transfer chain
References

Abstract

We study embezzlement when donations have to pass through intermediaries to reach recipients, by means of a sequential game tested in a laboratory experiment conducted in Tanzania. We investigate the impact on the amount embezzled of both the number of intermediaries in transfer chains and transparency about the donation. We show that donors are less generous in the presence of intermediaries. When transfer chains are shorter, aggregate embezzlement decreases when donations are transparent. At the individual level, intermediaries embezzle less, the longer the transfer chain; this is due to less embezzlement at the beginning of the chain. We fail finding significant positive effects of transparency on the honesty of individual transfers through social judgment.

DOI:10.1561/105.00000119