We study information transmission to a decision maker from an
advisor who values a reputation for incorruptibility in the presence
of a third party who offers unobservable payments/bribes. While
it is common to ascribe negative effects to such bribes, we show
that given reputational concerns, bribes can play a positive role by
restoring truthful communication that would otherwise not occur.
Thus, while bribes can influence self-interested bad advisors to lie
about the unfavorable state, they can also be used to motivate good
advisors who care more about the decision maker's utility to truthfully
report the favorable state. (JEL D82, D83)
Durbin, Erik, and Ganesh Iyer.
American Economic Journal: Microeconomics,
Asymmetric and Private Information
Search; Learning; Information and Knowledge; Communication; Belief