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Can Elections Reduce Embezzlement? Experimental Evidence on Selection Effects, Public Trust and Citizens’ Tolerance for Embezzlement

How do corruption outcomes, such as the embezzlement of public funds, depend on the method by which public decision makers are selected? Through an experiment with 472 groups of citizens in Burkina Faso, this paper compares elected and randomly appointed leaders along three dimensions: The leaders' social preferences, citizens' trust in them, and citizens' willingness to punish embezzlement. It is found that elections generally favor pro-social candidates and increase citizens' willingness to punish embezzlement. However, elections also cause citizens to be overly trusting towards decision makers. Leaders who are able to hide embezzlement can exploit the public trust that elections confer upon them. Transparency is important to counteract this perceptive bias.