Equilibria in game-theoretic models of corruption in network structures
DOI:
https://doi.org/10.17308/econ.2025.2/13062Keywords:
corrupt conspiracy, network corruption, social connections graph, opportunistic behavior, game theory, mechanism design, institutional environmentAbstract
Subject. The game-theoretic approach to modeling the behavior of economic agents in corrupt environments allows us to study the resilience of corruption networks and effective countermeasures. Corruption is conceptualized as the outcome of strategic interactions among rational actors.
Purpose. To examine strategic behavior within a network-based game-theoretic model of corruption and identify the conditions enabling the emergence of multiple equilibria, including interior ones.
Methodology. The analysis is based on a modified Ferrari model, where corruption coalition formation involves active recruitment of new members through network-distributed side payments, and the probability of punishment is inversely proportional to the coalition size. The study identifies conditions under which the system can persist indefinitely in an interior equilibrium or collapses into a corner equilibrium. Numerical simulations were conducted for varying values of key parameters: bribe size, penalty magnitude, number of participants and communication costs.
Results. The study demonstrates that a multi-agent network, represented as a directed graph, can exist in one of three distinct states: "virtuous" (everyone is honest); "intermediate" (different types of behavior coexist); "corrupt" (everyone is corrupt). A critical corruption threshold was identified. Exceeding this threshold triggers an irreversible transition to the corrupt equilibrium, which cannot be disrupted without targeted anti-corruption interventions. Furthermore, we derived the parameter-dependent tipping points governing transitions between stated equilibria. These include conditions under which corruption becomes self-terminating due to prohibitively high transaction costs. We also analyzed the comparative statics of the resulting stability ranges.
Conclusions. The model allows to the analyze the resilience of corruption network and enables the evaluation of anti-corruption policy effectiveness. It highlights the critical importance of timely intervention to mitigate the risk of self-sustaining corruption emergence. The findings are also significant for designing economic mechanisms aimed at achieving a sustainable reduction in societal corruption levels.
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