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"Stochastic games are a mathematical model that is used to study dynamic interactions among agents who in uence the evolution of the environment. These games were rst presented and studied by Lloyd Shapley (1953).1;2 Since Shapley's seminal work, the literature on stochastic games expanded considerably, and the model was applied to numerous areas, such as arm race, shery wars, and taxation"--

In developing countries with weak institutions, there is implicitly a large reliance on elections to instill norms of accountability and reduce corruption. In this paper we show that electoral discipline may be ineffective in reducing corruption when political competition is too high or too low. We first build a simple game theoretic model to capture the effect of electoral competition on corruption. We show that in equilibrium, corruption has a U-shaped relationship with electoral competition. If the election is safe for the incumbent (low competition) or if it is extremely fragile (high competition) then corruption is higher, and for intermediate levels of competition, corruption is lower. We also predict that when there are different types of corruption, then incumbents increase corruption in the components that voters care less about regardless of competition. We test the model's predictions using data gathered on audit findings of leakages from a large public program in Indian villages belonging to the state of Andhra Pradesh during 2006-10 and on elections to the village council headship in 2006. Our results largely confirm the theoretical results that competition has a non-linear effect on corruption, and that the impact of electoral competition varies by whether theft is from the public or private component of the service delivery. Overall, our results suggest that over-reliance on elections to discipline politicians is misplaced.

"Covering both noncooperative and cooperative games, this comprehensive introduction to game theory also includes some advanced chapters on auctions, games with incomplete information, games with vector payoffs, stable matchings, and the bargaining set. Mathematically oriented, the book presents every theorem alongside a proof. The material is presented clearly and every concept is illustrated with concrete examples from a broad range of disciplines. With numerous exercises the book is a thorough and extensive guide to game theory from undergraduate through graduate courses in economics, mathematics, computer science, engineering, and life sciences to being an authoritative reference for researchers"--