Modeling Corruption in Democratic States: Using Coordination Games to Explain Observed Trends in Corruption and Democratization

Abstract

This article examines the complex relationship between democratization and corruption, emphasizing the non-linear effects of prolonged exposure to democratic institutions. A repeated coordination game model is presented to capture the evolving political incentives in democratic systems and their impact on corruption levels. By incorporating evolving heterogeneous payoffs, the model realistically reflects individual incentives and provides insights into the rate of convergence toward a stable equilibrium. The results generally align with existing empirical findings, demonstrating that significant reductions in corruption typically emerge only after sustained exposure to democratic institutions. These findings not only support previous empirical research, but also offer a robust theoretical framework for understanding the delayed yet profound improvements in governance associated with democratization.