Corruption in Public Procurement Auctions: Positive Equilibrium Analysis, Incentive Mechanism Design, and Empirical Study

Wihardja, Maria Monica

doi:10.2139/ssrn.1294088

Cited by 4 publications

(2 citation statements)

References 58 publications

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“…Approximately 98 per cent of local government corruption occurred at the budget planning stage (Warta Ekonomi, 2017). Despite the budgeting phase presents a great opportunity for fraud, previous research have focused on procurement implementation (Auriol, 2006; Buchner et al , 2008; Han et al , 2012; Wihardja, 2010). Based on these limitations, this study focus on procurement budgeting fraud, particularly in developing country.…”

Section: Introductionmentioning

confidence: 99%

Fraud triangle in public procurement: evidence from Indonesia

Rustiarini

Sutrisno

Nurkholis

et al. 2019

JFC

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Purpose This study aims to examine the effects of fraud triangle (pressure, opportunity and rationalization) on individual fraudulent behavior in Indonesian public procurement. Empirical research in this area is relatively sparse. Design/methodology/approach Data were collected using laboratory experiments. Findings The results revealed that fraudulent behavior is higher when an individual has high pressure and high opportunity. These factors play an important role in determining individual rationalization. Most of participants used “displacing responsibility” to rationalize their actions. This study also demonstrated that negative affect mediates the relationship between fraudulent behavior and rationalization. Research limitations/implications First, fraudulent behavior research cannot be separated from social desirability bias. Second, the experiments only involved individual decision-making, not in groups. Finally, this study did not examine the effectiveness of rationalization in reducing negative affect. Practical implications Over the years, the government has only focused on the identification of pressure and reduction of opportunities, but ignored individual psychological reasons. Considering that procurement fraud is always increasing, the government must more focus on individual reasons to design an effective prevention and detection system. Social implications There are various conflicts of interest in public procurement budgeting. These conflicts can distort resource allocation and causes budget leakage. As a result, the government is incapacitated to achieve social and economic goals of the community. Originality/value There is limited research about fraud in public procurement budgeting, especially in developing countries. In addition, the fraud triangle research, which focuses on rationalization is still limited.

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Section: Introductionmentioning

confidence: 99%

Fraud triangle in public procurement: evidence from Indonesia

Rustiarini

Sutrisno

Nurkholis

et al. 2019

JFC

View full text Add to dashboard Cite

show abstract

“…Burguet and Che (2004), Compte et al (2005), LambertMogiliansky and Sonin (2006), Büchner et al (2008) and Wihardja (2010) study models where bribes are determined by bidders. They consider bidders' competition of bribes, while our paper assumes that only the favored bidder is likely to bribe and other bidders are not aware of the corruption.…”

Section: Related Literaturementioning

confidence: 99%