Transparent Corruption: The Effect of Illicit Connections and Trusted References on the Demand for Bureaucratic Intermediation

• DOI: 10.1017/xps.2024.13
• Publication Date: 2024-10-15T06:25:06Z
• Authors: José Ramon Morale...; Ana Ibarra

AbstractThis article investigates the effect of priming the existence of corrupt connections to the bureaucracy and of trusted references on the demand for intermediary services. We performed an experimental survey with undergraduate students in Caracas, Venezuela. Participants are presented with a hypothetical situation in which they need to obtain the apostille of their professional degrees in order to migrate and are considering whether to hire an intermediary (“gestor”) or not. The survey randomly reveals the existence of an illicit connection between thegestorand the bureaucracy and whether a trusted individual referred the intermediary. Our findings are not consistent with the “market maker” hypothesis that revealing the existence of illicit connections increases demand. Consistent with the view that trust is a key element in inherently opaque transactions, we find that the demand for intermediaries is price inelastic whengestoresare referred by trusted individuals.