International Deal-Making

International deal-making, beliefs, and local social norms

Project Summary

The international community has invested considerable resources in building an international anti-corruption legal architecture, to which many governments have signed up. This includes the OECD Anti-Bribery Convention, the UN Convention on Transnational Organized Crime (including money laundering), as well as the UN Convention Against Corruption. However, countries vary considerably in the implementation of their commitments and the resources devoted to enforcing anti-corruption laws.

Given a growing body of research that suggests individuals engage in corruption where they see it as a widespread social norm and/or because they assume that others in their environment will behave corruptly, this variation in enforcement might seriously undermine the effectiveness of such laws. This project seeks to quantify the influence of norms and beliefs about the behavior of others on the willingness of individuals to offer or receive bribes. Another goal is to examine how this willingness varies depending on the country-of-origin of bribe-payers and enforcement officers.

Policy and Programming Implications

The findings of this research will help policymakers and transnational institutions design more effective international anti-corruption policies. The findings also will enable governments and organizations to best leverage anti-corruption laws to build organizational cultures of integrity. Governments and companies can use these insights to foster beliefs and values that enable behavioral integrity spreading from one context to another. As such, our analysis will shed light on how best to diffuse norms of integrity in an international context, and the role of laws and enforcement in achieving that goal.

Research Questions

• How do participants in international deal-making weigh various considerations and accompanying trade-offs in regard to the well-being of their fellow countrymen and  international partners?
• What do these participants in international deal-making believe about how their international partners will weigh considerations?
• What role, if any, do social norms play?

Methodology

Incentivized experiments have been designed by a multidisciplinary team involving economists, a political scientist, and advisory board representatives from business and law enforcement. The experiments will be conducted transnationally, so as to capture an essential aspect of the international business context in which many forms of corruption occur. To ensure external validity, participants will be recruited who are expected to become involved in international business in a professional capacity, either as officials in their country or working for investment firms. This experimental data will be compared to existing surveys on corruption.

This project will help to advance methodological debate in the field by demonstrating how experiments can optimally be used to complement other methods in the generation of policy-relevant insights. Such evidence is extremely important given that major investments in anti-bribery enforcement and compliance are being made by governments and by the private sector, and yet compliance procedures often fail on the ground.   

ACE Impact

Findings

This study employs experimental methods across nine nations (N = 2506) to scrutinize the behavioural foundations of international anti-bribery laws. It assesses how individuals’ conduct is influenced by their expectations of enforcement, specifically gauging the probability that a ‘Monitor’ will detect, report, and penalise their transgressions. The findings reveal a substantial and significant decrease in the incidence of bribery when a Monitor is present. This decline results from the perception that the Monitor will expose corruption, despite participants harboring inaccurate beliefs about the likelihood of Monitors imposing penalties.

Our results suggest that the extraterritorial enforcement of anti-corruption laws, such as the Foreign Corrupt Practices Act (FCPA) and the new Foreign Extortion Prevention Act (FEPA), holds promise in combating corruption in international business transactions. However, our findings indicate that effective deterrence depends on authorities widely publicizing their enforcement activities. The deterrence effect of the law cannot be achieved if those whose behaviour they aim to alter do not believe that the relevant authorities monitor behaviour and enforce the rules.

Engagement

• Regulation research conference in Regensburg, December 2023.
• Economic Science Association, World Meeting, Special Session in memory of Klaus Abbink, Lyon, France, 26-29 June 2023.
• Keynote lecture, 7th International Meeting on Experimental and Behavioural Economics, Lisbon School of Economics and Management, 18-20 May 2023.
• Internal seminar at the University of Ulm, Germany, 16 May 2022.
• Internal seminar at the Freie University Berlin, Germany, 28 April 2022.
• Annual meeting of the German Experimental Society in Salzburg, Austria, 22 Sept 2022.
• Newcastle University Business School, 9 March 2022.
• Annual meeting of the German Experimental Society in Magdeburg, Germany, 23 Sept 2021.

Research Team Members

• Thorsten Chmura, Professor, Nottingham Trent University, Nottingham Business School
• Abigail Barr, Professor, University of Nottingham, School of Economics
• Elizabeth Dávid-Barrett, Professor, University of Sussex; Director of the Centre for the Study of Corruption
• Cormac Bryce, Senior Lecturer, City University of London, Cass Business School, Faculty of Actuarial Science and Insurance
• Marcus Giamattei, Professor, Bard College Berlin
• Theodore Alysandratos, Research Associate, Nottingham Trent University, Nottingham Business School