Social preferences, culture and corruption

Neoclassical economics more or less postulates that agents tend to maximize their own narrow self-interests and will hence break the law if the gains outweigh the costs of potential punishment. In this thesis, I argue that more understandings of corruption can be obtained incorporating insights from behavioral economics such as the postulates of social preferences. To understand why, and in what context, an individual decides to be corrupt, and in what context, it is helpful to recognize that economic agents care about not only their own narrow-interests, but also others’ payoff consequences as well as their moral image. I argue that the characteristics of other regarding preferences (synonymously as social preferences in Economics, and social value
orientation in Psychology) are relevant factors of decision-making in general, and corrupt decision making is no exception. More effective policies can be designed if we gain more realistic behavioral insights.