Modeling of corruption in hierarchical organizations

MATHEMATICS RESEARCH DEVELOPMENTS MODELING OF CORRUPTION IN HIERARCHICAL ORGANIZATIONS No part of this digital document may be reproduced, stored in a retrieval system or transmitted in any form or by any means The publisher has taken reasonable care in the preparation of this digital document, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions No liability is assumed for incidental or consequential damages in connection with or arising out of information contained herein This digital document is sold with the clear understanding that the publisher is not engaged in rendering legal, medical or any other professional services MATHEMATICS RESEARCH DEVELOPMENTS Additional books in this series can be found on Nova’s website under the Series tab Additional e-books in this series can be found on Nova’s website under the e-book tab MATHEMATICS RESEARCH DEVELOPMENTS MODELING OF CORRUPTION IN HIERARCHICAL ORGANIZATIONS OLGA I GORBANEVA GUENNADY A OUGOLNITSKY AND ANATOLY B USOV New York Copyright © 2016 by Nova Science Publishers, Inc All rights reserved No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher We have partnered with Copyright Clearance Center to make it easy for you to obtain permissions to reuse content from this publication Simply navigate to this publication’s page on Nova’s website and locate the “Get Permission” button below the title description This button is linked directly to the title’s permission page on copyright.com Alternatively, you can visit copyright.com and search by title, ISBN, or ISSN For further questions about using the service on copyright.com, please contact: Copyright Clearance Center Phone: +1-(978) 750-8400 Fax: +1-(978) 750-4470 E-mail: info@copyright.com NOTICE TO THE 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publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services If legal or any other expert assistance is required, the services of a competent person should be sought FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS Additional color graphics may be available in the e-book version of this book Library of Congress Cataloging-in-Publication Data Names: Gorbaneva, Olga I., author | Ougolnitsky, Guennady, author | Usov, Anatoly B., author Title: Modeling of corruption in hierarchical organizations / Olga I Gorbaneva, Guennady A Ougolnitsky, and Anatoly B Usov (Southern Federal University, Russian Federation) Description: Hauppauge, New York : Nova Science Publishers, Inc., [2016] | Series: Mathematics research developments | Includes bibliographical references and index Identifiers: LCCN 2015050165 (print) | LCCN 2016005043 (ebook) | ISBN 9781634843980 (hardcover) | ISBN:  (eBook) Subjects: LCSH: Corruption Mathematical models | Bribery Mathematical models | Ethics Mathematical models | Management Moral and ethical aspects Classification: LCC HV6768 G664 2016 (print) | LCC HV6768 (ebook) | DDC 658.4/7 dc23 LC record available at http://lccn.loc.gov/2015050165 Published by Nova Science Publishers, Inc † New York CONTENTS Introduction vii Chapter Corruption Problem and Its Mathematical Modeling Chapter Theoretical Models of Corruption in Hierarchical Control Systems Chapter Applied Models of Corruption in Hierarchical Control Systems 77 143 Conclusion 255 References 259 About the Authors 269 Index 271 INTRODUCTION Describing corruption as a complex socioeconomic phenomenon, endeavoring to reveal the regularities of corruption behavior based on its mathematical modeling and to suggest a system of restrictive measures for the negative impact of this phenomenon on a society and a national economy represents a very ambitious intention whose comprehensive coverage goes beyond the scope of a monograph Therefore, let us formulate a series of propositions outlining the specifics of this book and its place against the background of other research works in the field First, our study focuses on hierarchical organizational structures On the one hand, this specifies the class of models to-be-used, as the “Principal – supervisor – agent – object” structure becomes the main object of modeling This structure is considered fully (with explicit description of the object’s dynamics) in the dynamic case and partially (with implicit description of the object, i.e., confined to the agent’s impact on the object) in the static case On the other hand, such an approach does not cause appreciable loss of generality, since a hierarchical structure is inherent to an overwhelming majority of social organizations of any scale, level, form and field of activity Second, we perform modeling in the context of solving control problems Control-related analysis covers the activity of an agent as a potential or real briber, a supervisor аs a government official inclined to bribery and a Principal as a subject of anti-corruption struggle (note that wider interpretations are also possible) In the elementary setting (from the agent’s viewpoint), this leads to a static optimization problem or a dynamic optimal control problem In the general case, the noncoinciding interests of all participants make the hierarchical gametheoretic (static and dynamic) settings of conflict control problems more adequate Here a leader (a Principal or supervisor, depending on the level of analysis) applies administrative (compulsion) and economic (impulsion) control method The basic idea lies in treating corruption as additional feedback in the control loop by bribe amount And we share the following opinion expressed in the monograph (Russian corruption, 2013) which will be repeatedly mentioned throughout this book: “To the degree corruption induces management inefficiency, it is a key to identify this inefficiency Therefore, by studying corruption, we discover tools to improve management efficiency.” (p 77) Third, in the conditions of corruption a major task of control consists in ensuring sustainable development of modeled hierarchical organizations Here we proceed from the original concept of sustainable management (Ougolnitsky, 2002, 2005, 2010, 2011; Ougolnitsky and Usov, 2010-2014) In contrast to the classical approach of Gary Becker and viii Olga I Gorbaneva, Guennady A Ougolnitsky and Anatoly B Usov Susan Rose-Ackerman (which states that the efficiency of anti-corruption struggle is defined via comparing losses due to corruption and the costs of such measures), the above concept applies certain requirements of sustainable development of a modeled system with proper consideration of economic restrictions Fourth, a prominent role belongs to a complex issue on the empirical base of investigations and identification of mathematical models used No doubt, it is necessary to solve the measurement problem with regard to any object of scientific research, as measurements form an integral part of science Another well-known fact is that data acquisition in socioeconomic studies causes much more difficulties than in natural science studies, although considerable methodological problems in the latter exist Georgy Satarov noted the existence of two major approaches to corruption measurement, namely, the sociological approach (surveys with results processing) and the empirical approach (international indices assessing corruption in different countries), see (Levin et al., 2011, p 251) Actually, the second approach is inapplicable within our research, since international indices not serve for identification of hierarchical control models in the conditions of corruption The sociological approach is more flexible and universal by far Its detailed description and practical interpretation in the context of corruption analysis can be found in the fundamental monograph edited by Satarov (Russian Corruption, 2013) Moreover, the cited book adopted the model of Principal-agent relations as the theoretical base of public administration analysis in Russia, which agrees with our concept Nevertheless, direct usage of the available data (to say nothing of other sociological studies data) for model identification in our research seems impossible The underlying reasons are obvious: the authors of other studies posed different problems and answered different questions Therefore, to use the data acquired by other investigators, we have to construct a certain “transition module”; in the sense of labor intensiveness, this task is comparable with organization of a separate sociological study Even more the aforesaid concerns any attempts to employ existing statistical data on corruption as a delicate problem (e.g., the results of BEEPS surveys) Hence, a way of principle to solve the problem is conducting special sociological studies focused on identification of sustainable management models of hierarchical organizations in the conditions of corruption (i.e., according to a client’s order) Here we inevitably face systematic, organizational and financial problems whose solution appreciably exceeds the capabilities of the current research project And so, we have recourse to the following methodology Model relationships proceed from general beliefs about the nature of corruption, which allow establishing basic qualitative properties of corresponding functions (e.g., monotone increase or decrease, convexity or concavity, optimum points, etc.) Then it is possible to choose classes of functions enjoying required properties The primary aim of our research is revelation of qualitative regularities in corruption behavior and, on the one hand, numerical identification of functions from chosen classes seems not important in many cases Roughly speaking, in the class of linear functions y  ax  b , not the absolute value of the coefficient a but its sign is crucial for qualitative analysis On the other hand, if the inclination of a line and its intersection points with coordinate axes matter, one can perform (a) simulation experiments for different values of the coefficients and (b) the practical interpretation of the derived results This identification methodology will be described in detail in the course of further exposition Introduction ix Despite the stated arguments, the chiefly mental and somewhat conditional character of the models is to all appearance the most susceptible attribute of this work often subjected to criticism Nevertheless, we believe that constructing a logically consistent system of models for the complex socioeconomic phenomenon of corruption based on plausible assumptions reflecting real experience (some assumptions can be refined to become axioms), as well as on preceding studies is well justified and can yield practically sound conclusions, interpretations and recommendations Therefore, the main idea of our research consists in designing a system of universal theoretical models describing basic regularities of corruption behavior in hierarchical control systems, regardless of their industrial, territorial, cultural, historical or other specifics The capabilities gained by additional consideration of such specifics are illustrated by some applications of the theoretical models The formulated assertions define the structure and content of the monograph (their complete set underlying the authors’ concept of corruption modeling in hierarchical control systems is discussed in detail in Section 1.2) Chapter is dedicated to existing mathematical models of corruption Section 1.1 overviews and classifies the mathematical models of corruption in hierarchical control systems As classification bases, we choose the domains of corruption (microeconomics, macroeconomics, politics), the type of models (static, dynamic ones) and mathematical apparatus employed (optimization and optimal control theory, game theory, simulation modeling) And Section 1.2 introduces the authors’ concept of corruption modeling based on sustainable management theory Chapter considers the theoretical models of corruption in hierarchical control systems The logic of exposition is defined by the matrix “statics – dynamics” and “administrative corruption – economic corruption.” Under administrative (economic) corruption, a briber relaxes administrative (economic, respectively) requirements of an upper-level control subject In the sense of modeling, administrative corruption means compulsion (an impact on the admissible control domain) of an agent by a supervisor with bribe feedback, whereas economic corruption represents impulsion (an impact on the payoff function) of an agent by a supervisor with unique or additional bribe feedback In all cases, we construct a sequence of gradually complicated models providing more and more accurate description of real corruption phenomena in hierarchical control systems The main logical scheme of such a complication is “optimization models – hierarchical two-player games – hierarchical threeplayer games” (in statics) and “optimal control problems – hierarchical dynamic two-player games – hierarchical dynamic three-player games” (in dynamics) In addition, Chapter describes a simulation complex for static models of corruption We characterize the regularities of corruption behavior depending on the model parameters, as well as formulate appropriate recommendations on anti-corruption measures The definitions of compulsion and impulsion equilibria are given for dynamic models considering sustainable development requirements in the conditions of corruption, including some algorithms of their evaluation Chapter presents the applied models of corruption in hierarchical control systems A hierarchical system of control models of investment and construction projects in the conditions of corruption is characterized A sequence of gradually complicated quality control models in production systems with corruption is described, which realizes the idea of quality management compliance with sustainable development in organizational control Next, we study a hierarchical system of electricity stealing prevention models Analysis models for 262 Olga I Gorbaneva, Guennady A Ougolnitsky and Anatoly B Usov [56] Gorbaneva O.I., Ougolnitsky G.A (2013) Purpose and Non-purpose Resource Use Models in Two-level Control Systems//Advances in Systems Science and Application, 13(4), 378-390 [57] Gorbaneva O.I., Ougolnitsky G.A (2013) Static Models of Corruption in Resource Allocation Mechanisms for Three-Level Control Systems//Large-scale Systems Control, 42, 195-216 (in Russian) [58] Gorbaneva O.I., Ougolnitsky G.A (2014) Resource Allocation Game-Theoretical Models of River Water 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Yudkevich M.M., Podkolzina E.A., Ryabinina A.Yu (2002) Fundamentals of Contract Theory: Models and Problems – Moscow: Higher School of Economics (in Russian) References 267 [158] Zarenkov V.A (2006) Project Management – Moscow: ASV; St Petersburg: St Petersburg State University of Architecture and Civil Engineering (in Russian) [159] Zenkevich N.A., Petrosjan L.A., Yeung D.W.K (2009) Dynamic Games and Applications in Management – St Petersburg: Graduate School of Management Press (in Russian) ABOUT THE AUTHORS Olga I Gorbaneva Associate Professor Guennady A Ougolnitsky Professor and Head Anatoly B Usov Professor Department of Applied Mathematics and Computer Science Southern Federal University, Russian Federation Olga I Gorbaneva graduated from the Kalmyk State University in 2002, finished postgraduate studies in the Southern Federal University (2006) and received her PhD in the Stavropol State University (2009) She is currently an Associate Professor in the Department of Applied Mathematics and Computer Science, Southern Federal University, and is a specialist in the modeling of organizational systems Guennady A Ougolnitsky graduated from the Southern Federal University in 1984 and has been heading the Department of Applied Mathematics and Computer Science since 1997 A known specialist in mathematical modeling of the social-economic systems, a member of the editorial boards of the Russian journals Control Sciences, Control in Big Systems, Mathematical Game Theory and its Applications, Heuristic Algorithms and Distributed Calculations Described his research concept in the book Sustainable Management (2011) Anatoly B Usov graduated from the Southern Federal University in 1990 He is currently a Professor in the Department of Applied Mathematics and Computer Science, Southern Federal University, and a specialist in numerical methods of solution of the complex dynamic problems INDEX A administrative corruption, ix, 17, 72, 77, 78, 79, 81, 82, 85, 88, 89, 90, 91, 95, 96, 97, 98, 104, 107, 108, 114, 124, 125, 126, 127, 129, 130, 131, 132, 133, 145, 151, 153, 154, 157, 167, 169, 170, 172, 229, 231, 233, 236, 254 advancement(s), 32, 33, 34 agent, vii, viii, ix, 6, 10, 12, 17, 19, 20, 21, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 35, 36, 37, 71, 72, 73, 77, 78, 79, 80, 81, 82, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 96, 97, 98, 99, 100, 101, 102, 103, 104, 116, 117, 124, 125, 126, 129, 130, 131,132, 133, 134, 135, 137, 138, 139, 140, 141, 143, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 160, 161, 162, 163, 164, 165, 167, 168, 169, 170, 172, 174, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 214, 215, 217, 218, 226 algorithm, 46, 47, 49, 51, 52, 89, 109, 110, 112, 113, 114, 115, 119, 121, 122, 123, 130, 131, 138, 139, 140, 188, 189, 190, 231, 233, 240, 242, 243, 248, 251, 252 amortization, 239, 246 anti-corruption struggle, vii, viii, 1, 3, 16, 29, 35, 36, 39, 71, 73, 78, 89, 90, 104, 141, 143, 184, 190, 191, 224, 226, 244, 258 applied models of corruption, v, ix, 75, 143 appraisals, 15, 91 assessment, 5, 74, 144, 173 assessment models, 173 assets, 228, 239, 245, 246 Attorney General, 255 audit(s), 8, 19, 33, 36, 37, 178, 181, 186, 188, 230 authority(ies), 4, 19, 20, 21, 34, 36, 37, 53, 143, 144, 157, 159, 173, 177, 195, 227, 238, 244, 255 B ban, 5, 185, 187, 188 bargaining, 2, 9, 21 benefits, 2, 12, 15, 16, 21, 33, 37, 40, 42, 60, 62, 69, 98, 101, 105, 132, 140, 149, 160, 167, 168, 172, 179, 185, 186, 191, 193, 194, 218, 223, 225, 226, 234, 235, 236, 237, 250, 254 biomass, 117, 123, 124, 126, 132, 133, 134, 135, 140, 141 bonuses, 87, 220 bounds, 22, 27, 79, 220 bribes, 5, 6, 7, 9, 10, 12, 13, 14, 15, 18, 20, 23, 24, 25, 26, 30, 31, 32, 33, 62, 64, 66, 68, 70, 89, 91, 98, 173, 183, 191, 197, 202, 229, 230, 237, 244, 245, 254 bureaucracy, 14, 15 C campaigns, 8, 15 candidates, 5, 6, 33 capture, 5, 19, 20, 28, 35, 39, 55, 66, 72, 79, 82, 104, 125, 134, 145, 157, 179, 195, 206, 209, 210, 230, 232, 237, 254, 256 career development, Caucasus, 91, 265 certification, 5, 144 China, 4, 13, 263, 266 classes, viii, 53, 54, 55, 56, 73, 95, 107, 108, 125, 176, 257 classification, ix, 1, 4, 37, 71, 79, 80, 105, 143 clients, 2, 7, 19, 20, 24, 25, 30, 32, 184, 192 collusion, 5, 13, 19, 25, 29, 30, 33, 35, 36, 192 272 Index comparative analysis, 20, 22, 28, 62, 63 compensation, 25, 178, 191 competition, 6, 13, 15, 17, 25, 29, 40 compliance, ix, 20, 143 compliancy, 73, 79, 80, 256, 258 compulsion, vii, ix, x, 1, 24, 40, 41, 44, 45, 46, 48, 49, 50, 51, 52, 56, 59, 61, 62, 63, 64, 71, 72, 77, 78, 82, 88, 89, 90, 104, 107, 108, 109, 111, 112, 114, 115, 118, 126, 130, 135, 141, 143, 180, 194, 219, 220, 223, 224, 225, 226, 227, 228, 229, 231, 232, 235, 240, 244, 245, 247, 251, 252, 253 conflict, vii, 41, 42, 167, 172 conflict of interest, 167, 172 construction, ix, 5, 72, 143, 145, 147, 165, 168, 256 cost, 27, 36, 54, 85, 126, 198, 199, 228, 230, 238, 239, 245 cost constraints, 36 cost minimization, 85 credit market, 10 crimes, 29 criminality, 29 culture, 8, 14, 15 cumulative distribution function, 7, 10 D decentralization, 13, 38 decision-making process, 104 delegates, 2, 19 democracy, 17 deprivation, 5, 7, 31, 33 descriptive approach, 73, 80, 85, 104, 143, 265 detection, 3, 7, 9, 11, 12, 18, 21, 22, 23, 25, 29, 30, 31, 35, 37, 96, 126, 132, 135, 141, 157, 162, 164, 165, 187, 188, 191, 230 developing countries, 10 deviation, 42, 117, 126, 133, 135, 141, 157, 177, 221 direct foreign investment, 13 discretization, 132, 140 discrimination, 72, 104, 105 distribution, 6, 7, 8, 10, 12, 13, 14, 15, 20, 30, 38, 181, 182, 183, 184 distribution function, dominant strategy, 10, 83 dynamic systems, 42, 104, 107, 141 E economic activity, 12, 195 economic corruption, ix, 4, 72, 73, 77, 78, 84, 85, 86, 87, 88, 91, 94, 95, 101, 104, 107, 110, 115, 129, 131, 133, 134, 135, 136, 137, 139, 140, 141, 145, 148, 162, 163, 167, 169, 171, 172, 229, 230, 231, 233, 234, 244, 252, 253, 254, 255, 256 economic development, 13 economic efficiency, 174 economic growth, 14, 16 economic growth rate, 14 economic incentives, 189, 191 economic relations, 144, 192 economic rent, economic systems, x, 1, 54, 63, 143, 226 economics, 39, 258 employees, 30, 35, 63, 174 employment, energy, 34 engineering, 144 entrepreneurs, 2, 4, 10, 11, 12, 13, 14, 20 entrepreneurship, 10, 11 environmental conditions, 195, 196, 244, 250 environmental degradation, 17 environmental impact, 173 environmental policy, 17 environmental protection, 17 environmental standards, 19 equality, 11, 157, 162, 179, 189, 221 equilibrium, 3, 5, 7, 8, 9, 12, 13, 15, 16, 18, 26, 27, 28, 29, 31, 33, 37, 46, 47, 48, 49, 50, 51, 52, 56, 57, 59, 62, 93, 105, 108, 109, 110, 111, 112, 113, 114, 115, 116, 118, 119, 120, 121, 122, 123, 124, 130, 131, 137, 138, 139, 140, 202, 203, 207, 215, 217, 226, 231, 233, 240, 242, 243, 247, 248, 249, 250, 251, 252, 253, 254 execution, 19, 21, 144 exposure, 186 extortion, 4, 5, 19, 20, 25, 32, 35, 39, 55, 64, 66, 72, 79, 82, 104, 145, 157, 159, 184, 195, 206, 207, 209, 210, 211, 212, 230, 232, 237, 254, 256, 262, 265 F federal authorities, 187 feedback, vii, ix, x, 40, 42, 46, 51, 72, 77, 78, 86, 87, 104, 105, 107, 108, 109, 110, 111, 114, 115, 116, 126, 135, 158, 163, 253, 258 financial markets, 13 financial resources, 4, 16, 38, 191, 220, 229, 234, 237, 244, 245, 246, 254 force, 12, 21, 41, 255 foreign investment, 13 formation, 15, 16, 17, 144 formula, 26, 27, 81, 119, 126, 129, 130, 135, 137, 179, 193, 209, 226, 234, 244 fraud, 7, Index G game theory, ix, 1, 4, 39, 105 games, ix, 8, 15, 18, 37, 39, 42, 73, 74, 77, 78, 103, 104, 105, 106, 107, 108, 118, 119, 124, 144, 226, 229, 240, 247, 253, 256, 261, 264, 267 government failure, 10 government policy, 10, 17 gradually complicated models, ix, 74, 77, 78, 104, 257 greediness, 73, 79, 80, 82, 85, 145, 256, 258 273 institutions, 12, 15, 17, 18, 40 intentionality, 257 interest rates, 9, 10 interference, 10, 170 international trade, 15 investment(s), 6, 12, 13, 14, 143, 145, 168, 239, 241, 246, 256 investors, 144 J Java, 176 H hierarchical control systems, v, ix, 2, 71, 72, 73, 74, 77, 78, 104, 143, 256, 257, 261, 266 hierarchical dynamic three-player games, ix, 77 hierarchical dynamic two-player, ix, 77 hierarchical organizations, i, iii, vii, viii hierarchical three-player games, ix, 74, 77, 104 hierarchical two-player games, ix, 74, 77, 78, 104, 264 honesty, 2, 7, 8, 14, 21, 22, 23, 24, 25, 27, 29, 33, 34, 149 I identification, viii, 1, 14, 19, 38, 39, 73, 74, 75, 80, 81, 85, 87, 91, 92, 125, 134, 176, 193, 259, 263 identification problem, 39, 73, 74, 75, 91 ideology, 15, 257 IMF, 263 immunity, 4, 69, 92 imprisonment, 185, 187, 188, 191 impulsion, 41, 48, 61, 62, 63, 72, 194, 227, 243 income, 2, 3, 5, 6, 7, 10, 11, 12, 13, 14, 17, 18, 21, 26, 27, 32, 33, 34, 58, 59, 60, 62, 63, 65, 66, 69, 70, 71, 73, 79, 81, 82, 84, 87, 88, 91, 92, 106, 117, 124, 132, 134, 135, 140, 145, 146, 147, 149, 151, 157, 159, 162, 164, 165, 167, 169, 173, 176, 178, 191, 192, 194, 197, 199, 200, 220, 221, 222, 228, 231, 238, 244, 245, 246, 251, 252, 253 income distribution, 13 industry, 39 inequality, 21, 56, 57, 88, 117, 163, 179, 185, 189, 190, 206, 209, 212, 213, 214, 215, 217, 234, 237, 242 informal practices, 39 information exchange, 105 information technology, 255 inspections, 40, 91 inspectors, 19, 177, 191 L Latin America, law enforcement, 26, 71, 255 linear function, viii, 54, 74, 82, 192, 221 linear programming, 163, 203 lobbying, 15, 39 M macroeconomic models, 15 macroeconomics, ix, 1, 4, 10, 12 management, vii, viii, ix, 1, 3, 30, 39, 40, 44, 45, 52, 71, 78, 93, 96, 103, 106, 107, 108, 112, 113, 114, 115, 116, 124, 126, 132, 133, 135, 140, 141, 143, 172, 173, 175, 177, 191, 195, 255 manipulation, 5, 19, 98 manufacturing, 174 market failure, 10 matrix, ix, 1, 4, 16, 77, 129, 137, 152, 204 measurement(s), viii, 38, 39, 73, 74 medical, 174, 255 medical care, 255 methodology, viii, 5, 15, 39 metric spaces, 45, 48 microeconomics, ix, 1, 4, models, vii, viii, ix, 1, 2, 3, 4, 7, 8, 10, 12, 15, 17, 19, 30, 35, 36, 37, 38, 39, 40, 71, 73, 74, 75, 77, 78, 94, 95, 96, 103, 104, 105, 107, 108, 120, 124, 126, 131, 132, 133, 135, 140, 141, 143, 145, 151, 157, 168, 169, 173, 184, 191, 201, 209, 210, 222, 226, 254, 255, 256, 257, 258 modifications, 2, 12, 37, 71, 72, 103, 104, 191, 192, 247, 253 monopoly, 2, 6, 9, 19 moral standards, 14 motivation, 18, 19, 20, 32 274 Index N Nash equilibrium, 9, 26, 37, 166 national income, 12, 13 natural resources, 16, 17, 53, 174 negotiation, 20, 21 normative approach, 73, 104, 143 O officials, 5, 6, 7, 8, 9, 12, 18, 20, 24, 25, 28, 30, 32, 33, 34, 38, 40, 71, 80, 85, 91, 92, 244, 255 open economy, 13 operations research, 258 opportunism, optimal control problems, ix, 74, 77, 104, 254 optimization, vii, ix, 1, 4, 10, 11, 36, 39, 44, 66, 67, 73, 74, 77, 78, 79, 80, 85, 86, 87, 89, 96, 104, 112, 114, 121, 122, 125, 129, 135, 143, 145, 146, 147, 151, 152, 160, 161, 163, 164, 168, 169, 170, 171, 173, 186, 191, 192, 193, 201, 202, 208, 211, 213, 214, 229, 233, 239, 241, 242, 243, 246, 255, 256, 257 optimization method, 173 optimization models, ix, 74, 77, 78, 95, 96, 143 P Pareto optimal, 7, 11, 173, 174, 176, 177 participants, vii, 2, 16, 17, 36, 74, 186, 202, 203, 216, 219 penalties, 2, 3, 7, 8, 19, 21, 23, 24, 26, 27, 29, 31, 36, 53, 91, 103, 169, 178, 184, 187, 190, 191, 195, 196, 197, 198, 199, 202, 227, 230, 237 policy, 16, 17, 19, 33, 35, 191 political power, 16 political system, 74 politics, ix, 1, 4, 39, 77, 255 pollutant, 227, 238 pollutants, 53, 195, 198, 199, 200, 201, 202, 213, 214, 227, 228, 230, 238, 239, 244, 246, 247 pollution, 19, 174, 195, 196, 198, 199, 227, 228, 229, 230, 237, 238, 239, 244, 245, 246, 250 population, 16, 17, 18, 31, 117, 123, 126, 132, 133, 134, 135, 140, 141 population growth, 132, 141 population size, 117, 134 poverty, 13 prejudice, 33 principal, vii, viii, 17, 19, 20, 21, 30, 35, 36, 37, 71, 73, 78, 79, 81, 84, 87, 88, 89, 90, 91, 92, 93, 94, 96, 103, 104, 116, 126, 130, 131, 133, 134, 135, 139, 140, 141, 143, 159, 168, 169, 170, 171, 172, 173, 177, 178, 184, 185, 186, 187, 188, 190, 191, 192, 193, 194, 196, 197, 198, 199, 200, 201, 202, 203, 205, 206, 207, 208, 209, 210, 211, 212, 214, 215, 216, 217, 218, 226, 227, 238, 242, 243, 244, 245 private firms, 3, probability, 3, 6, 7, 9, 11, 12, 16, 17, 18, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 31, 32, 33, 34, 35, 37, 96, 126, 132, 135, 141, 157, 162, 164, 182, 183, 185, 186, 187, 191, 230, 233 probability distribution, 185 procurement, 35, 255 product market, production costs, 2, 173, 175, 178, 181, 183 production function, 6, 97, 99, 100, 165, 174, 199, 202, 203, 207, 210, 220, 228, 239, 245, 246 production technology, 174 professional development, 6, 40 profit, 2, 6, 9, 10, 11, 16, 17, 181 profitability, 20, 62, 64, 66, 88, 144 programming, 176, 204, 209, 257 project, viii, 143, 144, 145 property rights, 173 protection, 244 public administration, viii public goods, 6, 7, 34 public health, public opinion, 15 public service, 19 public welfare, 6, 11, 12, 14, 15, 17, 26, 27, 28, 29, 71 punishment, 21, 30, 31 Q quality assurance, 157, 159 quality control, ix, 143, 160, 174, 176, 194, 201, 226, 256 quality production, 174 quality standards, 157, 158, 159, 161, 184, 227, 244 quotas, 4, 53, 64, 66, 70, 71, 91, 96, 169 R RAS, 266 real estate, 95, 96, 103, 143, 145, 151, 152, 153, 157, 159, 162, 165, 169, 170, 171 real income, 192 reform, 18, 263, 265 reformers, 15 rent, 1, 3, 12, 15, 17, 18, 34, 40 Index requirements, viii, ix, x, 1, 5, 19, 40, 42, 44, 45, 48, 71, 72, 73, 77, 78, 79, 81, 84, 89, 90, 91, 92, 104, 105, 107, 108, 111, 112, 113, 114, 115, 126, 131, 135, 139, 140, 141, 143, 145, 169, 173, 174, 196, 220, 224, 235, 252, 253, 257 resource allocation, 20, 35, 36, 37, 165, 167, 194, 197, 201, 202, 206, 207, 209, 210, 211, 219, 220, 226 resource utilization, x, 59, 66, 143 resources, 3, 55, 165, 176, 195, 196, 197, 198, 199, 200, 201, 202, 204, 206, 207, 208, 209, 211, 220, 222, 223, 224, 225, 226, 235, 238, 257, 258 response, 6, 45, 46, 49, 50, 51, 57, 64, 66, 67, 70, 71, 96, 118, 122, 154, 177, 179, 190, 207, 211, 215, 217, 218, 243, 248 restrictions, viii, 79, 92, 144, 157 risk, 2, 5, 6, 10, 11, 12, 13, 14, 34, 183 risk assessment, risk aversion, S sanctions, 9, 91, 103, 173, 185, 186, 187, 191 sensitivity, 35, 82, 94, 98, 101, 145, 149, 157 services, 34, 72, 77, 82, 104, 173, 230, 255 shadow economy, 10, 12, 40 simulation, viii, ix, 1, 4, 12, 13, 77, 94, 96, 103, 122, 123, 143, 147, 160, 231, 242, 243, 256 small business, 191 society, vii, 3, 13, 14, 15, 16, 37, 40, 173, 228 software, x, 94, 95, 96, 97, 98, 101, 103, 143, 148, 149, 153, 161, 174, 191, 209, 256 solution, viii, 2, 11, 21, 22, 27, 33, 41, 42, 46, 49, 50, 52, 56, 57, 66, 73, 74, 88, 89, 90, 96, 104, 105, 109, 111, 115, 116, 121, 122, 123, 125, 129, 130, 131, 135, 138, 140, 148, 161, 168, 169, 170, 171, 172, 173, 174, 176, 179, 180, 181, 186, 188, 189, 191, 192, 193, 194, 196, 203, 204, 208, 209, 211, 212, 216, 218, 231, 235, 241, 242, 243, 248, 251, 252, 256, 257 stability, 15, 16, 41, 42, 105, 108 state(s), 8, 13, 14, 41, 42, 43, 44, 45, 48, 53, 71, 104, 105, 106, 108, 109, 127, 136, 161, 162, 180, 196, 198, 220, 227 stimulation, 16, 18, 21, 24, 124 strategy use, 51 structure, vii, ix, 4, 6, 8, 19, 24, 25, 29, 30, 35, 36, 43, 66, 73, 78, 95, 105, 130, 131, 137, 139, 165, 173, 174, 175, 181, 201, 244, 256 subgame, 41, 42, 105 supervision, 25, 27, 30, 206, 209, 212, 220, 254 supervisor, vii, ix, 19, 71, 72, 73, 77, 78, 79, 81, 84, 87, 88, 89, 90, 91, 93, 94, 96, 97, 98, 100, 101, 275 103, 104, 116, 124, 125, 126, 129, 130, 131, 132, 133, 134, 135, 137, 138, 139, 140, 141, 143, 149, 154, 157, 158, 159, 160, 161, 162, 163, 164, 165, 167, 168,169, 171, 172, 192, 193, 194, 226, 257 supervisors, 30, 40 suppliers, 144, 174, 192 supporting institutions, 17 suppression, 16, 21, 22, 24, 29, 33, 36, 38, 71, 149 surplus, 10, 31 sustainable development, vii, ix, 1, 40, 53, 54, 59, 64, 71, 72, 73, 77, 78, 79, 84, 90, 104, 105, 112, 114, 115, 116, 117, 123, 126, 130, 131, 133, 135, 139, 140, 141, 143, 145, 161, 162, 168, 169, 170, 173, 220, 221, 222, 223, 224, 240, 242, 243, 244, 247, 250, 252, 253, 254, 256, 264, 266 sustainable management, vii, viii, ix, 1, 40, 44, 45, 52, 71, 78, 93, 106, 107, 108, 112, 113, 114, 115, 172, 173, 255 T tax collection, 84 tax evasion, 7, 8, 13, 14, 18 tax rates, 71, 96, 141 taxation, 4, 13, 53, 258 taxes, 7, 19, 39, 53, 64, 66, 70, 72, 84, 85, 86, 87, 88, 91, 92, 101, 127, 136, 162 taxpayers, 19 technologies, 10, 176 technology, 10, 229, 239, 246, 257 theoretical models of corruption, ix, 77, 257 total costs, 2, 85, 101 trade, 40, 41, 42, 45 trajectory, 42, 46, 47, 49, 50, 51, 52, 119, 248 transaction costs, treatment, 4, 12, 39, 40, 72, 74, 143, 195, 196, 197, 198, 199, 200, 202, 213, 214, 215, 217, 218, 227, 228, 229, 232, 234, 235, 237, 238, 239, 244, 245, 246, 250, 254 V variables, 6, 39, 72, 73, 89, 91, 121, 127, 129, 136, 151, 163, 176, 201, 204, 221, 222, 230, 231, 247, 251, 252 variations, 96, 104, 105, 161 vector, 8, 26, 42, 43, 44, 45, 48, 106, 173, 175, 177, 178, 180 voters, voting, 15 276 Index W wages, 6, 33, 174, 183 waste water, 195, 196, 197, 198, 199, 200, 201, 202, 213, 227, 228, 229, 232, 234, 235, 237, 238, 239, 244, 245, 246, 247, 250, 254 water purification, 196, 197, 198, 199 water quality, 194, 201, 212, 226, 227, 228, 238, 239, 243, 244, 245, 246 water resources, x, 143, 226, 256 welfare, 26, 27, 29 Y yield, ix, 90, 124, 146, 147, 193, 204, 231, 258 ... The influence of cultural factors on corruption was also investigated in (Kingston, 2008) Models of corruption in hierarchies Insofar as corruption is the manifestation of rational economic thinking... simulation modeling) And Section 1.2 introduces the authors’ concept of corruption modeling based on sustainable management theory Chapter considers the theoretical models of corruption in hierarchical. .. models of corruption in hierarchical control systems A hierarchical system of control models of investment and construction projects in the conditions of corruption is characterized A sequence of