The limits of transparency in reducing corruption

Does transparency, understood as information precision on budget size, deter embezzlement and bribery when they co-occur? We use a laboratory experiment to study the impact of transparency on reducing corruption in these contexts. Our results show that transparency decreases embezzlement while it has no significant effect on bribery. One potential explanation of the observed differential impact of transparency is that resource managers are strategically using the uncertainty on the available budget in their favor. In the experiment, participants in the resource manager role act as if low public investment rates were a consequence of bad luck (low budget) instead of misappropriation. Specifically, embezzlement decreases with high transparency, while bribes remain unaffected. This result suggests that the impact of transparency is not similar on all types of corruption when different types co-occur.