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Controlling Extortion and Collusion: Morality, Peer‐Effect, and the Strategies Beyond Punishment

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Increased penalties and active auditing reduce instances of extortion and collusion in bureaucracy, promoting compliance.
The number of corrupt officers is influenced by enforcement measures like penalties and the presence of independent auditors.
Extortion is likely to occur in low-penalty conditions, necessitating strategic increases in enforcement to mitigate risks.
Controlling economic incentives effectively reduces incidents of collusion, indicating the interdependence of incentives and enforcement.

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Analysis reveals how enhanced enforcement and moral standards influence extortion and collusion rates.

Banerjee et al. (2025) studied this question.

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