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Benefit Sharing: An Incentive Mechanism for Social Control of Government Expenditure
Código: WPE – 077
The present paper analyzes the incentives individual members of society face to contribute to a nation’s efforts in controlling corruption. A Principal-Agent model is constructed, leading to the following results. First, although individual agents do have an interest in devoting a portion of their resources to the nation’s control effort, the opportunity cost of the effort and a free rider problem bocks the spontaneous provision of individual support to corruption control. Second, to cope with those incentives, a new welfare improving mechanism is proposed, which aligns individual incentives with those of society at no extra cost to the government.