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Abstract

The paper uses dynamic global game model to study the impact of large shock or crisis on the magnitude of corruption for nondemocratic regime. Corruption level impacts citizens’ satisfaction about the regime while large shock, e.g., financial crisis and pandemic, can drastically raise citizens’ dissatisfaction about the government and their incentive for participating in revolution. The model assumes fat-tailed distribution of the common shock that can trigger shift between equilibrium strategies for the citizens, where revolution is more likely to occur in the lower cut-off equilibrium. The multiplicity of equilibria due to nonmonotonic rank belief function of the citizens enables large shock to trigger major attack without a high corruption level. We show that dictator’s fear for the effect of large shock on the outbreak of revolt can disincentivize him from conducting more severe corruptive behaviors. However, if the dictator cares little about the impact of crisis on revolution, he will remain or even intensify the corruption level and thus the threatening effect of large shock would diminish.

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