Hans J. Czap

Corruption: Democracy, autocracy, and political stability

The recent empirical literature on corruption has identified a long list of variables that correlate significantly with corruption but only five were distinguished by Leamer’s Extreme Bounds Analysis as robust to various samples, measures of corruption, and regression specifications. Among these five factors that were found to reduce corruption are decades-long tradition of democracy and political stability. In today’s world, however, there are many countries that combine one of these two robust determinants of corruption with the opposite of the other: politically stable autocracies or newly formed and unstable democracies. The central question raised in this paper is: Is it worth, in terms of corruption, for a country to trade stability with autocratic rule for political freedoms but with transitional instability? We find that the answer to this question is in the affirmative - the level of corruption is indeed lower in unstable democracies than in stable dictatorships. Our results are robust to various measures of corruption, alternative regressor indices, and regression specifications.

Walk the Talk? The Effect of Voting and Excludability in Public Goods Experiments

The purpose of this paper is to investigate the effect of voting and excludability on individual contributions to group projects. We conducted two experiments on excludable and nonexcludable public goods, which provided several important results. First, contrary to our expectations, subjects are generally contributing more to the non-excludable compared to the excludable public good. Second, participating in a vote to choose a public project per se makes no difference in contributions. However, if the project that the individual voted for also gets selected by the group, they contribute significantly more to that project. Third, empathy and locus of control are important driving forces of participation in common projects. Our results have implications on the procedural design of obtaining funding for public projects. First, the public should get involved and have a say in the determination of which project should be realized. Second, it might well pay off to attempt to develop a consensus among the population and obtain near unanimous votes, because in our experiment, subjects discriminate between the project they voted for and the project chosen by the majority. Third, the policy proposers should stress the other-regarding interest of the public good rather than just pecuniary incentives.

A Theoretical Foundation for Empathy Conservation: Toward Avoiding the Tragedy of the Commons

A Theoretical Foundation for Empathy Conservation: Toward Avoiding the Tragedy of the Commons

Selection of Minimal Variable Subsets with the help of Genetic Algorithms in Economic Analysis

In this paper we demonstrate the use of Genetic Algorithms in the selection of significant variables from a large set of available variables used to explain the observed behavior of subjects in an economic experiment. Standard regression analysis requires assumptions on a functional form and may thus prevent us from finding all relevant relationships. When using a more flexible functional form the number of coefficients (corresponding to different variables and their interactions) grows exponentially. Hence, our goal in this paper is to select the smallest set of variables with the largest “explanatory” value. We use a variation of a non-traditional type of Genetic Algorithm, CHC, to “evolve” this preferred minimal set of relevant variables. We compare this approach with estimation based on basic linear (least squares) regression models and regression models chosen by using the stepwise regression method. Additionally, we also evaluate the effectiveness of various fitness criteria in our genetic algorithm’s fitness function. We believe that an evolutionary computation approach provides a useful alternative and supplementary method to more traditional methods by offering potentially new useful subsets of significant variables warranting further exploration and a limit to the number of coefficients in outputs.

Comparing Female and Male Response to Financial Incentives and Empathy Nudging in an Environmental Context

In the environmental context the combination of financial and non-financial incentives (specifically, empathy nudging) has been shown to be more effective than either of them individually (Czap et al., 2016). We investigate whether there are gender differences in the effectiveness of financial and non-financial incentives by using data from a framed laboratory experiment on environmental conservation behavior. Specifically, we compare the change in conservation efforts of females and males in response to financial incentives and empathy nudging applied separately and simultaneously. Our findings show that financial incentives affects males more than females, while empathy nudging affects only females. The combination of incentive and nudge lead to a synergetic effect for females, but not for males. This implies that policy makers can increase the effectiveness of environmental policy by accounting for these gender differences, especially as the number of farms headed by females in the US increases.

Government Positions for Sale - A Model of Grand Corruption

This paper develops a model for a particular type of grand corruption often encountered in developing countries, namely, the sale of government positions by autocratic rulers. A two-stage game is considered, where the autocrat moves first to maximize his revenue from the sale of positions in the cabinet by choosing a price that must be paid by interested politicians. The latter become bureaucrats who maximize their utility from bribe revenues for the given price set by the president. Backward induction yields subgame-perfect equilibrium levels of corruption of the president and bureaucrats. A key insight from this analysis is that conventional tools of fighting corruption become ineffective when corruption at the very top is ignored. The model is distinctive in its treatment of individual moral costs of being corrupt and in its consideration of a revolutionary constraint on the autocrat’s choices.