Corrupt organizations are often filled with rational people who are making the most logical decision for their own careers.
April 23, 2026
Original Paper
The Nash-Moral Paradox: How Rational Individual Behavior Produces Institutional Concealment Equilibria
SSRN · 6332578
The Takeaway
Institutional concealment of misconduct is a stable game-theoretic equilibrium where everyone is acting in their own self-interest. This means that cover-ups are not necessarily the result of a few bad apples or moral failures. Most people assume that if you just hire more ethical employees, the corruption will stop. This model suggests that the structure of the organization itself forces people to hide the truth to survive. Fixing systemic dysfunction requires changing the incentives of the game rather than just preaching about morality.
From the abstract
<div> <div> Why do institutions conceal misconduct even when most participants would prefer transparency? This monograph develops a formal answer: the Nash-Moral Paradox (NMP), a structurally stable concealment equilibrium that emerges from the interaction of institutional capture and rational belief updating. Using an agent-based computational model — the Systems Model of Dysfunction (SysMoD) — I formalize a six-step causal mechanism in which leaders invest in information control and retaliatio