Contemporary Issues in Public Economics II:
Economics of Corruption and
Behavioral Limits of Dishonesty
Summer Semester 2013
INSTRUCTOR INFORMATION
Elina Khachatryan
Office: NP 4, Rm. 3213
Phone extension: 3973
E-mail: [email protected] (Please write me an email with your top three topic choices!
Topics will be distributed on first-come first-serve basis).
Office Hours: By appointment
COURSE DESCRIPTION
Corruption is a widespread phenomenon in many countries. Its detrimental effects have been
documented in a number of empirical studies. For example, corruption in developing countries
accumulates into impediments to economic growth and development. Moreover, there seems to be
an unfavorable correlation between corruption and inequality and, as well as health, education and
public infrastructure. During recent years, corresponding evidence also stems from laboratory
experiments. The convenience of a controlled lab environment not only allows to identify causal
relationships, but at the same time provides a testbed for mechanisms that are meant to fight
corruption.
COURSE MATERIALS
Following articles that summarizes most of the existing literature on the topic of experimental
research in corruption MUST BE READ BEFORE the registration on HIS and the corresponding
email with topic preferences, so that all students make informed and interest-based decisions on the
topic they would like to work on.
1. http://faculty.smu.edu/dserra/AbbinkSerra_Final.pdf (required!)
2. http://mpra.ub.uni-muenchen.de/38163/1/MPRA_paper_38163.pdf (optional, but
recommended)
Slides on the rest of the material that will be lectured in class will be available online on Moodle.
Moodle Password is Abbink.
Further, an optional text that may be valuable for reviewing course concepts:
The Institutional Economics of Corruption and Reform: Theory, Evidence and Policy. Johann Graf
Lambsdorff. Cambridge University Press, 2007.
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LIST OF AVAILABLE TOPICS
1. Probability of punishment and exogenous sanctions (5.1)
2. Penalties with endogenous risk; Endogenous vs. exogenous penalties; Monitoring by
humans (5.2 – 5.4)
3. Public officials’ wages and corruption (5.5)
4. Institutional arrangements to fight corruption; The industrial organization of corruption
(5.6 – 5.7)
5. Whistle-blowing and bottom-up mechanisms (5.8)
6. Evidence on framing effects (6.1)
7. Evidence on externality effects (6.2)
After completing the required reading by Abbink and Serra (2012) (see the first article above),
please WRITE ME AN EMAIL with your top THREE topic choices, with your most desired topic
being the first choice mentioned, etc. Topics will be distributed on first-come first-serve basis.
Once, enough people are registered online on HIS and have written me the corresponding email, I
will send out the list with your final topic assignments. Thereafter you can start working
(individually) on your short paper assignment.
GRADING

Short Paper
30%
Each student is required to submit a written assignment on his/her topic by 13th of May, 2013. (No
late submissions will be accepted). The latter must consist of a detailed literature review of the
selected/assigned topic, discussion of potential shortcomings of the existing literature and each
student’s individual suggestion for a potential extension in this topic. Paper must be written
individually, without consultation with others. It must be original work, and any outside source
used must be properly cited and documented. Writing must be concise and clear! The short paper
should be in the range of 4-5 pages, excluding the bibliography.
Formatting requirements: 1.5 spaced, margins of 3cm from top & bottom, 2cm from left & right.
 Challenge: Extra credit can be earned by finding and discussing most recent published or
working papers on your (or closely related) topic that I do not yet know.

Group Presentation
35%
After submission of the short paper, each student should work in cooperation with the other
students that have selected / were assigned to the same topic. Together you must prepare a onehour class presentation on your topic. You should decide in the group how to best present the
literature review part and which of the individual extensions or combination thereof are worthwhile
for presenting. You will receive individual feedback on your short papers in a timely manner
(beginning of June), that you should incorporate into the group presentation. June 14th & 15th are
reserved for student group presentations.

Exam
30%
Exam questions will be a straightforward review of the material discussed in class. It will be based
on the lectures, but not student presentations. Duration of the exam is one hour. Exam is closedbook, closed-note, individual effort.
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
Class Participation
5%
You should be prepared for class and expect to be called upon without notice to contribute to
class discussion. Questions and comments after presentation of peers are especially encouraged.

Attendance
Attendance in the seminar is mandatory and will be checked regularly. A student may miss only
one of the 2-hour sessions. If a student misses more than one of these sessions or is absent on one
of the group presentation days, he/she will not receive credit for the class.
ACADEMIC INTEGRITY
Academic misconduct will not be tolerated in any form. Any violation of the academic integrity
policy will result in failure of the course. Ambiguity in academic integrity policies is not an
excuse for a violation. If you have any questions about how the policy applies to a specific
scenario, please discuss them with me.
COURSE CALENDAR
Date
Time
Room
March
Schedule (tentative)
Topic assignment / distribution via email.
26.04.13
14:00-16:00
NP 4, # 1213
1. Corruption – A Game on Reciprocity
03.05.13
14:00-16:00
NP 4, # 1213
2. Measuring Corruption
13.05.13
No class
17.05.13
14:00-16:00
NP 4, # 1213
3. The Consequences of Corruption
24.05.13
14:00-16:00
NP 4, # 1213
4. The Causes of Corruption
5. Incentives, Ethics, and Punishment
07.06.13
14:00-16:00
NP 4, # 1213
6. How Criminals Enforce their Deals
14.06.13
14:00-20:00
NP 4, # 1213
Student Presentations: Topics 1 – 4
15.06.13
9:00-18:00
NP 4, # 1213
21.06.13
14:00-20:00
NP 4, # 1213
28.06.13
14:00-16:00
NP 4, #1213
Student Presentations: Topics 5 – 7
( + possibly some lectures)
7. Corruption, Intermediaries, and Whistleblowing
8. Anticorruption – Lessons Learned
9. (optional) Exam Review Session
One-hour Final Exam
(possibly already on 21.06.13 if we manage to finish the
lecture material quicker)
Short Paper DUE via Moodle.
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