Corruption,Cooperation and Endogenous Time Discount Rates

Virtually all uses of repeated games tostudy of cooperation assume that people'stime discount rates are exogenous andfixed. Here we offer an evolutionary gameembedded in a multi-period model ofinvestment and consumption in whichindividual time discounts are determined bytheir convergence to values determined byEvolutionary Stable Strategies. Oursubstantive motivation, though, iscorruption and its relationship to economicgrowth. To understand the observedrelationship between levels of corruptionand economic indicators of social welfare,we argue that corruption is a form ofcooperation that requires closeinterpersonal monitoring. If we assume,moreover, that when people discount thefuture greatly the only sustainable formsof cooperation are those that allow forclose monitoring, then our analysis can beinterpreted as a dynamic model of therelationship between corruption andinvestment.