Past event
Brown Bag Seminar with Dr Christopher Stapenhurst, Budapest University of Technology and Economics Turning bribes into lemons: An optimal mechanism
Abstract: Corruption requires a coalition to form and reach an agreement. Is there a cheap way to stop any agreement from being reached? We find an optimal mechanism that resembles Poker. The players' hands are synthetic asymmetric information, and they create a lemons problem in the market for bribes. Our Poker mechanism is robust: it thwarts bribes regardless of the negotiation procedure, including alternating offers bargaining, Dutch auctions, arbitration, and so on. In compliance cases, there is a trade-off between rewarding the agent for honesty and punishing the agent for non- compliance. This trade-off is resolved by rigging the Poker hand distribution against the agent.