Blockchain Technology as an Instrument for Corruption Risks Minimization in the Principal-Agent Model - Курсовая работа

Blockchain Technology as an Instrument for Corruption Risks Minimization in the Principal-Agent Model Abstract blockchain technology corruption Corruption being the reason of principal-agent problem can be eliminated by introduction of blockchain technology into the system of interconnection between principal and agent. The results are obtained by exploring both theoretical framework of agent theory and it’s practical applications, and blockchain technology and its latest implementation in Estonia, Georgia and Sweden. The results of this research lend support to the two hypotheses tested: 1) implementation of blockchain technology can contribute to resolving corruption related problems of principal-agent model and minimize the level of corruption connected with interactions between citizens and governmental bureaucratic structures; 2) blockchain technology can increase level of public trust in political institutions. Introduction Topicality. Corruption is a widespread phenomenon that could be met in different spheres of interaction between individuals. It is not necessary to prove that economic and social impact of corruption is harmful, and that this problem concerns everyone. Of course, economic and political consequences of bribes, fraud, nepotism are significant but the more crucial thing is that corruption kills people: corruption is also about terrorism, about the absence of fair access to water sources, land and development. Attempts to reduce the level of corruption by traditional popular anticorruption instruments, for instance, extensive police investigations, legislation optimization, bureaucratic simplifications have partly demonstrated their effectiveness but also inability to overcome corruption completely. The implication of these instruments is a significant factor of corruption reduction but they never lead to complete corruption elimination. The prevailing theoretical framework of corruption research is the agency theory (Ugur, Dasgupta, 2011). According to this approach, the corruption problem is a product of principal-agent relations, where an agent takes actions on behalf of a principal and has an advantage in information. The general problem highlighted in this approach is an asymmetry of information: an agent could use his information advantage to get the own benefit (Mitnick, 1976). Zimmerman, 1977; Jensen and Meckling, 1976), others “blend elements of the economics heritage with concern for sociological variables such as norms, organization theoretic concepts like control and authority, and questions of organizational behavior, societal function, and institutional evolution” (Eisenhardt, 1989; Mitnick,1973; Mitnick, 1984). Another categorization suggests two following streams: positivist agency theory (Jensen and Meckling, 1976) and principal-agent research (Demski & Feltham, 1978; Haris & Raviv, 1979). Representatives of the first group pay attention to cases where controversial relations between principal and agent could emerge and explore how to regulate such relationships and avoid specific problems. The principal agent research is more formal and abstract, this stream highlights assumptions and specifications of the principal-agent model, using the mathematical modeling and other formal instruments (Eisenhardt, 1989). This research deserves to highlight major lines and aspects of agency theory. Hence, three foundational works that formed the common principal-agent concept were chosen for more detailed analysis. Stephen Ross (1973) and Barry Mitnick (1973, 1974, 1976) are the originators of agency theory, who formed main theoretical foundations of this field.