If the owner of an object sells it through an auction run by an agent of hers, corruption may appear. In a first-price auction, corruption can make honest bidders more or less aggressive. We identify sufficient conditions for each possibility. We analyze the effects of corruption on efficiency, bidders' welfare and revenue, and study how it influences the number of bidders. Our results apply, as a particular case, to the situation where one of the bidders is granted a right of first refusal.

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In developing countries, we observe high levels of corruption even if they have democratic political systems. This is surprising from a political economy perspective, as the majority generally suffers from high corruption levels. We show that a lack of financial institutions can lead to more corruption as more voters are part of the corrupt system. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures.

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Does decentralization reduce corruption in developing countries? What can explain the decentralization success or failure in combating corruption in these economies? Using cross-country information we show that decentralization does not have any effect on corruption in developing countries. Modelling corruption and political accountability we show that the increment of the local elites’ power, the large between-jurisdictions income inequality, and the transfers’ design may explain these results

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This paper focuses determine the behavior of citizens in participating in corruption acts focusing in Mexico and using both quantitative and qualitative methods. There is trade-off between perceptions, social dynamics and individual incentives for corrupt behavior within an institutional framework, which creates a kind of vicious circle difficult to break up.

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Both for-profit and pro-poor microfinance institutions (MFIs) use incentive pay schemes for their credit agents to induce information acquisition on borrowers. But when repayment and wealth are positively correlated, non-profit MFIs trying to reach very poor borrowers need to use costly random audits on the share of very poor borrowers selected. When richer borrowers can bribe agents, a pro-poor MFI can reduce agents' wages and lend more to the poor, turning some collusion to its advantage.

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The overwhelming majority of cases where corrupt politicians have been punished involve the detection of consumption levels that appear to be too high. The informativeness of an agent’s level of consumption depends negatively on his initial level of wealth. This introduces a tendency to choose poor agents as they are easier to monitor. More generally, we show that, even if agents have similar preferences, there are contractual advantages to selecting particular types.

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