The Decision to Collude: A Game Theory Analysis of a Group Decision to Engage in Corrupt Behavior

Abstract

This paper uses game theory to model the decision of three individuals to engage in corrupt or fraudulent behavior. The effects of whistleblower rewards and sanctions for corrupt behavior are included in the model to forecast the conditions under which an individual would make the decision to collude and engage in a corrupt act. The effects of symmetrical and asymmetrical rewards and punishments are explored and the model suggests that punishment may be more effective than rewards in reducing incentives collude. Suggestions for future research and implications for practice are presented.