Study on Government Anti-Corruption Based on

Game Theory
WANG Jin-fu
School of ManagementXian Polytechnic University
Xian, P.R.China 710048

ZHANG Kui
Personnel OfficeXian Polytechnic University
Xian, P.R.China 710048
AbstractIt is a well-established fact that corruption is a
widespread phenomenon and it is widely acknowledged because
of negative impact on economy and society. An important aspect
of corruption is that two parties act separately or jointly in order
to further their own interests at the expense of society. To
strengthen prevent corruption, most of countries have consturuct
special organization. The paper presents a new measure based on
introducing game theory as an analytical tool for analyzing the
relation between anti-corruption and corruption. Firstly, the
paper introduces the corruption situation in China, gives the
definition of the game theory and studies government anti-
corruption activity through constructing the game theoretic
models between anti-corruption and corruption. The relation
between supervisor and the anti-corruption will be explained
next. A thorough analysis of the mechanism of informant system
has been made accordingly in the third part. At last, some
suggestions for preventing and fight corruption are put forward.
Key Words: Corruption; Anti-corruption; Game theory;
Informant system
I. INTRODUCTION
According to the World Bank, corruption is an act --- abuse
the official duty and the rights of others for the purpose of
abstaining profit for himself or for other people. The act of
official or fiduciary person who uses his status or character
unlawfully and wrongfully to procure some benefit for himself
or for another person contrary to duty and the right of others. In
a word: use of public office for private gain[1]. UN ANTI-
CORRUPTION CONVENTION has put forward that
corruption has become a serious intimidate to the social
stabilization and safety. It destroys democracy system and
value view, morality and justice, form imperil to the political
stabilization and sustainable development of one country [2].
UN put forward that it is important to prevent and control the
corruption through expanding international cooperation [3].
For this, it requires the comprehensive and colligates subjects
methods
Nowadays, China has become one of the most serious
corruption countries in the world. In the last 5 years, 120
thousands cases have been put on record for corruption and
bribe, and 209487 persons have been sentenced to criminality,
among them there are some main leaders [4]. Corruption
brings huge loss. HU an-gang, dean of research centre of the
situation of country of China Academy of Social Science,
points out that our country has lost 987.5-1257 billions yuan
every year including economy and consumer welfare because
of corruption, occupying 13.2%16.8% of GDP of whole
country [5]. Although the government has strengthened the
force to prevent corruption, we havent received good result of
anti-corruption. As forint, it is feasible to analyze the
relationship between anti-corruption and corruption and seek
the effective measure to anti-corruption. This paper, based on
the game theory, analyzes the government anti-corruption and
information system, studies the behaviors and policies of
corruption and anti-corruption, and makes research on the
countermeasure of informant system for anti-corruption. At
last, some suggestions are put forward for reducing corruption.
II. GOVERNMENT ANTI-CORRUPTION GAME THEORY
A. Game theory
Game theory is the formal study of conflict and
cooperation. Game theoretic concepts are applied whenever the
actions of several agents are interdependent. These agents may
be individuals, groups, firms, or any combination of these. The
concepts of game theory provide a language to formulate,
structure, analyze, and understand strategic scenarios [6].
As a branch of mathematics, game theory starts to be used
as a framework for analysis after the publication of Von
Neumann and Morgensterns (1944) Theory of games and
economic behaviors [7]. As such, the main use of game theory
was in economics through the early 1970s, when its use started
to spread to other social fields.
B. Game theory studys on corruption and anti-corruption
Many countries have set up special organization to
strengthen anti-corruption. These organizations boosted the
anti-corruption effectively. And the managers in these
organizations also have tendency to corruption, so the behavior
between manager in anti-corruption agencies and corruption is
complex.
Suppose the variance followed by analysis of the
relationship between the above two.
C Cost of anti-corruption;
F punishment of the corruption
K unlawful income of anti-corruption;
B cost of corruption;
Q anti-corruption probability of agencies;
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R corruption probability;
LQ true anti-corruption probability;
( ) Q A 1 false anti-corruption probability naturally

GA
V Utility function of agencies anti- corruption;

ZA
V utility function of corruption be punished;

GN
V utility function of agencies no anti-corruption

ZN
V utility function of corruption

1 i
V income of agencies anti-corruption;

2 i
V income of corruption.(i=1,2,3,4,5,6,7,8)
Figure 1. anti-corruption game theory model
Otherwise, suppose
( )( ) Q A 1 1
as not anti-corruption
because of bribery or shadow. R refers to corruption
probability, (1-R) is not corruption probability. According to
this, set up the model and count the income.
; ,
12 11
F K V C F V = =
; 0 ,
22 21
= = V C V
; ,
32 31
B K V C V = =
; ,
42 41
B V C V = =
; , 0
52 51
K V V = =
; 0 , 0
62 61
= = V V
; , 0
72 71
B K V V = =
; , 0
82 81
B V V = =
The game theory strategy matrix of anti-corruption and not
anti-corruption are followed:
TABLE I. ANTI -CORRUPTION GAME THEORY STRATEGY MATRIX1
Corruption
CorruptionR Not corruption1-R




TABLE II. NOT ANTI-CORRUPTION GAME THEORY STRATEGY MATRIX 2
Corruption
CorruptionR Not corruption1-R



From figure1 we can get utility function:
( ) ( ) [ ] ( )
( ) [ ] CQ LQFR R C CR
LQ Q R C R C F LQ V
GA
=
+ =
1
1

( ) ( )( ) [ ] ( )
( ) BQ LQB FRLQ KRQ B LQ Q
R B K LQ Q LQ F K R V
GA
= =
+ + =
) (
1

from figure3 we can get utility function:
0 =
GN
V
( ) ( )( )( ) [ ] ( )( )
( )( ) ABQ BA BQ B RKQ RK Q A
B R B K Q A Q KA R V
ZN
+ + =
+ + =
1 1
1 1 1 1
For anti-corruptionit hope result followed
ZA GA
V V >
ZN GN
V V >
;

Count inequality is not easy, transfer the two formula:
{ }
ZA GA
V V max
. .t s
ZN GN
V V >
Namely, { } BQ LQB RKQ CQ LQFR + 2 max
. .t s 0 < + + ABQ QB BQ B RKQ RK
with Lagrange multiply form function next:
( )
( ) ABQ AB BQ B RKQ PKQ RK
M BQ LQB RQK CQ LQFR Q R F
+ +
+ + = 2 ,

(note: R, Q are variable, others are constant )
The anti-corruption exists Nash equilibrium. Counting the
Lagrange multiply, the result is Nash equilibrium.
0
2
= +
+ + =
ABM MB MKR B
LB RK C LFR MKR B B F

0 2 = + = MKQ KM QK LFQ F
K 0 0 0
B K 0 B 0
F K C F 0 C
B K C B C
1-R 1-R 1-R
R
R R R 1-R
(V11, V12) (V21, V22) (V31, V32) (V41, V42) (V51, V52) (V61, V62) (V71, V72) (V81, V82)
Not Anti-c
(1Q)
Not Anti-c
naturally(A-
AQ)
False Anti-
corruption
(1LQ)
others
(1-A)(1-Q)
Anti-
corruption
Anti-
corruption
Anti-
corruption
Anti-CQ
corruption corruption corruption corruption
True Anti-
corruption
LQ
Anti-
Corruption(Q)
Anti-corruption
Ture Anti-
corruptionQ
not Anti-corr
uption1-Q
not Anti-
corruption(1-Q)
Anti-corruption
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0 = + + = ABQ AB BQ B RKQ RK L
( )
( )

+
=
+ +
+
=
+
(

+
+ + +
=

BK
LBK ABK ABLF KC
M
LBK ABK ABFL KC BK LBF
LBF KC LBK ABK
Q
ABF ABLF LBK KC K ABK BKFL
ABK ABLF LBK KC AB
AKB ALFB K B KL B BKC
R
2
2
2 2 4
2
2 4
2
2 2 3
2
2 2 2 2

Discuss the excellent result as follows:
1) let L=A=1 means true anti-corruption, not exist
bribery or protect.So
KC BF
BF KC BK
Q
CK BFK
FB KB BKC
R

+
=
2
2 2
2
4 4 4
2
B,K,C fixedness, the larger F is the smaller Q is.If F
tends to be infinite,
K
B
R Q
2
, 1 = =
, in general
situation, K is larger than 2B. Q and R are all near or
less than 0. The frequency of anti-corruption will
reduce when the punishment to corruption is infinity.
But the punishment of economic method is limited, the
government adds some other means to punish the
corruption.
Let B,K,C fixedness. The larger K is, the larger Q will
be So will R. This explains that the probability of
corruption occurs in high frequency when he or she is
driven by special privilege or benefit. The frequency of
anti-corruption is higher too.
Let B,K,C fixedness. The larger C is, the larger R is.
The larger R is, the smaller Q will be. It explains that
the cost of anti-corruption will influence the effect of
anti-corruption and give the corruption selection.
2) Let L=A=0, namely bribery or protect existed
everywhere, then:
C B
C
Q
CK BFK
B BC
R
+
=
+

=
2
2
2 3
From the two equation above, we can know that Q, R,
F have no relation effected by K, B, C. This explains
that there is no true anti-corruption when L=A=0. Or
corruption will bribe the anti-corruption, making false
anti-corruption or no corruption. The case of XiaMeng
YuanHua is just the case.
When C fixedness, the larger K is. The probability of
anti-corruption is
C B
C
+ 2
, so corruption will bribe
the manager. If R becomes larger, Q becomes smaller.
The corruption will become vicious.
When K fixedness, the larger C is. The probability of
anti-corruption becomes higher, the corruption will
bribe the anti-corruption with some of K so as to avoid
be investigated At that moment, the Q becomes
smaller, R becomes larger.
III. THE GAME THEORY BETWEEN SUPERVISOR AND ANTI-
CORRUPTION
As to anti-corruption, the managers may bribe and false
anti-corruption or attach themselves to corruption. The
supervisor will be required to supervise the anti-corruption.
The game is made between the supervisor and anti-corruption.
Suppose that corruption will avoid punishment if they bribe
the manager successfully. And D is punished for anti-
corruption when the manager is found to be bribed kF is
encouraged to anti-corrupt when the manager works
effectively. B is the amount of anti-corruption bribery. C is the
cost of supervise. Q, R are the probability of charge department
supervise and anti-corruption refusal bribery. According to
these suppose, we set up income matrix:
TABLE III. INCOME MATRIX
Anti-corruption(F)
Bribery(1-R) Not bribery(R)



From the above income matrix, we can get the following
results:
( ) ( )( ) ( ) [ ]
( ) ( ) ; 1 , 0
, 1 1 , 1
FR k R G
C F k R C D R G
=
+ =
( ) ( ) ( )
( ) kF Q F
Q B Q D B Q F
=
+ =
, 0
, 1 , 1
For supervisor, expect two result at least:
( ) ( )
( ) ( ) Q F Q F
R G R G
, 0 , 1
; , 0 , 1
=
=
Then:
D
kF B
R
D
C D
R

=
If it is impossible for the manager to supervise the anti-
corruption frequently, the C becomes very small. In order not
to make anti-corruption bribe, the only way is to increase the
punishment amount. From the above result , we know that R is
near to 1 when D tends to be infinity. So the government
should give grueling in economic plus administration
punishment and punishment in law.
When kF is nearer to B, the smaller Q is. It means the
supervisor may supervise with low frequency. And the
government should increase the encouragement for anti-
corruption. Of course, the corruption will bribe the anti-
D B C D , ( ) kF C F K , 1
B 0 ( ) kF F K , 1
Supervisor (G)
Supervise(Q)
Not supervise
(1-Q)
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corruption with large amount of property. If the B is large than
F, the supervisor will not give all the income to the anti-
corruption. So the Q will become larger and larger. To avoid
this situation, the supervisor also give hortation in spirit. Then
the encouragement will tend to infinity. And the Q will become
a lesser value.
IV. DYNAMIC GAME THEORY OF INFORMANT SYSTEM
In anti-corruption activity, the anti-corruption faces the
information asymmetry. China found the informant system to
reduce the influence from information and know the corruption
situation. We can analyse the informant system based on
dynamic game theory.
Suppose: if there are somebody give information about
corruption in N anti-corruption, government will give
_
=
n
i
i i
A k
1 )
`

=
ormation no give
ormation give
k
i
inf , 0
inf 1
,
i
D
is the cost of
informant,
i
C
is the cost of anti-corruption without information
from informant. The informant are rational. In other words, If
he will not get reward for his first informant.
i
F
is the income
of anti-corruption, R, Q are frequency of the anti-corruption
given reward and informant given information. (i=1,2,3)
Based on the suppose, we set up the income matrix table4:
TABLE IV. INCOME MATRIX
Anti-corruption(F)
Encouragement (R) Not encouragement (1-R)

From the income matrix, the anti-corruption gives
encouragement to informant only when the expectation of the
anti-corruption is larger than not encouragement of them. And
the informant will give information to the anti-corruption only
when their income is larger than not give information.
We can get inequality as followed:
From equation (2), we can know that the informant will
give information when the reward is larger than their cost. In
fact, the cost of informant usually is very low. And make 1/2
frequency as boundary, we know
_ _
= =
=
n
i
i i i
n
i
i
C K A K
1 1
,
means that the anti-corruption will give reward when the
amount is lower than their cost of got information.
The above model constructed on the base of the informant
getting income, not calculate the cost of the informant such as
make retaliate. This kind of cost is very high and make many
informant not dare inform the corruption. So the government
should constitute the informant system which guaranteed the
safety of informant person. Control the cost of the informant
person to the lowest degree.
V. CONCLUSION
Anti-corruption activity is a long- term task Though it is
easy to explain it in theory ,it is difficult to do in practice. In a
country with heavy corruption and poor governance, the
priorities in anti-corruption efforts would establish rules of law,
strengthen institutions of participation and accountability, and
limit government interventions to focus on core mandates. So
we should analyze the motivation and behaviors of the
corruption and put up the feasible countermeasure.
Establish an effective organization to anti-corrupt ,to
eliminate the safeguard from the local government, and
increase the punishment to the corruption.
Set up an informant system to eliminate the influence
of information asymmetry.
Found the mechanism of reward of anti-corruption and
punishment if corruption, including economic means,
administration, law and spirit. Only in this way can we
eliminate the corruption effectively and efficiently.
ACKNOWLEDGEMENTS
The author wishes to thank the Su shibing Ph.D and Gou
xiao qin associate professor for their kind support. Thanks also
to and other colleagues from my department at Xian
Polytechnic for their comments on earlier drafts of the paper.
REFERENCE
[1] World Bank, Governance & Anti-Corruption. www. worldbank.org
/wbi/governance. 2005.
[2] United Nations Convention against Corruption.
www.unodc.org/unodc/corruption.html 2006.
[3] World Bank. Reforming Public Institutions and Strengthening
Governance. A World Bank Strategy, November, 2000
[4] Xiao yang. The report of the supreme court of the people's republic of
china. http://news.sina.com.cn/z/2008qglh/zgfbg.html/, 2008
[5] Hu An-gang.China: Challenage for Corruption, Zhejiang peoples press.
2001.
[6] Nolan M. McCarty, Adam Meirowitz, Political Game TheoryAn
Introduction, Cambridge University Press, 2006:121-124.
[7] Von Neumann J, Morgenstern O. The Theory of Games and Economic
Behavior. Princeton University Press, 1944.
( ),
1
i i
n
i
i
D A k
_
=
( ) [ ]
_
=

n
i
i i i i
C k k F
1
1
( )
_
=
+
n
i
i i i i
C C F D
1
,
( )
_
=

n
i
i i
C F
1
, 0 ( )
_
=

n
i
i i
C F
1
, 0
Give-infor
mation(Q)
Informant (G)
Not give-infor
mation(1-Q)
( ) [ ] ( ) ( )
( )( )
( )
_
_
_ _ _ _
=
=
= = = =

|
.
|

\
|
+
|
.
|

\
|
+
N
i
i i i i i
N
i
i i
N
i
n
i
i i
n
i
n
i
i i i i i i
QD Q D A K
R C F
R C F C F C K K F
1
1
1 2 1 1
0
1
1 1
( )

+
+ +

_ _
_ _ _ _ _
_ _
= =
= = = = =
= =
n
i
n
i
i i i i i
n
i
n
i
n
i
n
i
n
i
i i i i i i i i
N
i
n
i
i i i
D k D C K
C K C C A K C F F
C C F
R
1 2
1 1 1 2 1
1
1 2
) 2 ( 2
) 1 (
2 2 2
2 2

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