Favoritism and allocative efficiency: a game theoretic approach
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This paper seeks to investigate the interaction between favoritism and allocative
efficiency. The issue of whether corruption distorts allocative efficiency in a bribery
game under a pre-existing environment of alleged favoritism is considered. It is
demonstrated that if there is no unambiguous favoritism, observed favoritism in bribery
game may disrupt allocative efficiency. A bribery game under corruption and favoritism
is developed. The model and some possible equilibria are discussed. A simple numerical
example from Lebanon is also presented.