Unpacking Bribery: Petty Corruption and Favor Exchanges

Abstract The incidence of petty corruption in public service delivery varies greatly across citizens and geography. This paper proposes a novel explanation for citizen engagement in collusive forms of petty corruption. It is rooted in the social context in which citizen-public official interactions take place. I argue that social proximity and network centrality provide the two key enforcement mechanisms that sustain favor exchanges among socially connected individuals. Bribery, as a collusive arrangement between a citizen and a public official, relies on the same enforcement mechanisms. Using an original dataset from a household survey conducted in Guatemala, the analysis shows that social proximity and centrality allow citizens to obtain privileges through implicit favor exchanges and illicit payments. These findings are not driven by better access to information about the bribery market. This paper contributes to our understanding of the role of preexisting social relations in sustaining corrupt exchanges.