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The study seeks to provide an answer to the following question: why corruption is so resistent despite a convincing progress in adopting good governance institutions worldwide? Four main explanations are discussed. The theoretical discussion is accompanied and expanded by two case studies – Argentina and Chile. Both countries are very similiar regarding their social, economic, and political development. However, the level of corruption is vastly different. The study shows that predominant explanations of corruption, namely the principal-agent model and the cultural-moral argument, do not properly adress the question of individual motivation to act partially or impartially. Thus, they lose the explanatory power. As a result, the institutional design or cultural-moral norms are overestimated, and the illusion of a rapid progress towards corruption-free governance is made. The study aims to fix the latter shortcoming. A stag hunt game is used as a heuristic tool. Game theory and historical institutionalism are combined in it. This strategy is able to show that corruption as well as its contrast – good governance – are very stable equilibria. Both equilibria are maintained through the structure of competition – interaction among individuals. This interaction is a very important part of individual motivation to follow one of the equilibria, because it determines the possibility to overcome the collective action dillema – the central problem of politics. If the mutual expectations predict a fair strategy of the others, then good governance prevails.The opposite case is corruption. However, the most significant value of the study is that it provides concrete examples. The study shows how mutual expectations were influenced by the very first stag hunt – modernization – and how different equilibria have emerged. Using the method of process tracing, the modernization of Argentina and Chile is presented. It specifies how Argentina remained in corruption while Chile reached good governance. Modernization in Chile was gradual and covered heavy industry intensive regions. These circumstances were favourable for the development of right and left wing parties, and soon a genuine party competition emerged. The most significant social groups were represented through parties, and they could cooperate. Incentives for corruption declined. Meanwhile modernization in Argentina was rapid and covered light industry intensive regions. Such modernization prevented right and left forces to organize into parties. The most significant groups remained unrepresented and defended their interests through corruption. Even if this argument suits only Latin America during 1880–1940, it still delivers a clear message. The interaction among individuals is positively influenced by a genuine party competition in which all significant groups participate. Such a competition encourages mutual trust, improves mutual expectations and creates preconditions for a good governance.

The study seeks to understand why corruption is so resistant despite a convincing progress in adopting good governance institutions worldwide. It presents one of the very few success stories and aims to evaluate the possibilities to reduce corruption. The study contributes to the theoretical discussion by suggesting a heuristic tool – the stag hunt game – in which game theory and historical institutionalism are combined. This model is applied to the process of modernization analysis in Argentina and Chile. The critical junctures that shifted these countries towards different roads are highlighted. Argentina has remained in the stalemate of corruption, while Chile has managed to establish good governance. ; Šiame straipsnyje nagrinėjamas korupcijos reiškinys. Viena vertus, siekiama suprasti, kodėl ji tokia atspari, nepaisant įtikinamos pažangos kuriant kokybiško valdymo institucijas. Kita vertus, pristatoma viena iš retų sėkmės istorijų ir taip bandoma įvertinti korupcijos sumažinimo galimybes. Teorinę diskusiją siekiama praturtinti siūlant euristinį instrumentą – Elnio medžioklės žaidimą. Jame derinamos žaidimų teorijos ir istorinio institucionalizmo prieigos. Pagal šį modelį analizuojami Argentinos ir Čilės modernizacijos procesai ir užfiksuojami lemiami taškai, nubloškę šalis į skirtingas pusiausvyras. Argentina liko korupcijos aklavietėje, o Čilė pasuko gero valdymo keliu.

The study seeks to provide an answer to the following question: why corruption is so resistent despite a convincing progress in adopting good governance institutions worldwide? Four main explanations are discussed. The theoretical discussion is accompanied and expanded by two case studies – Argentina and Chile. Both countries are very similiar regarding their social, economic, and political development. However, the level of corruption is vastly different. The study shows that predominant explanations of corruption, namely the principal-agent model and the cultural-moral argument, do not properly adress the question of individual motivation to act partially or impartially. Thus, they lose the explanatory power. As a result, the institutional design or cultural-moral norms are overestimated, and the illusion of a rapid progress towards corruption-free governance is made. The study aims to fix the latter shortcoming. A stag hunt game is used as a heuristic tool. Game theory and historical institutionalism are combined in it. This strategy is able to show that corruption as well as its contrast – good governance – are very stable equilibria. Both equilibria are maintained through the structure of competition – interaction among individuals. This interaction is a very important part of individual motivation to follow one of the equilibria, because it determines the possibility to overcome the collective action dillema – the central problem of politics. If the mutual expectations predict a fair strategy of the others, then good governance prevails.The opposite case is corruption. However, the most significant value of the study is that it provides concrete examples. The study shows how mutual expectations were influenced by the very first stag hunt – modernization – and how different equilibria have emerged. Using the method of process tracing, the modernization of Argentina and Chile is presented. It specifies how Argentina remained in corruption while Chile reached good governance. Modernization in Chile was gradual and covered heavy industry intensive regions. These circumstances were favourable for the development of right and left wing parties, and soon a genuine party competition emerged. The most significant social groups were represented through parties, and they could cooperate. Incentives for corruption declined. Meanwhile modernization in Argentina was rapid and covered light industry intensive regions. Such modernization prevented right and left forces to organize into parties. The most significant groups remained unrepresented and defended their interests through corruption. Even if this argument suits only Latin America during 1880–1940, it still delivers a clear message. The interaction among individuals is positively influenced by a genuine party competition in which all significant groups participate. Such a competition encourages mutual trust, improves mutual expectations and creates preconditions for a good governance.

The study seeks to provide an answer to the following question: why corruption is so resistent despite a convincing progress in adopting good governance institutions worldwide? Four main explanations are discussed. The theoretical discussion is accompanied and expanded by two case studies – Argentina and Chile. Both countries are very similiar regarding their social, economic, and political development. However, the level of corruption is vastly different. The study shows that predominant explanations of corruption, namely the principal-agent model and the cultural-moral argument, do not properly adress the question of individual motivation to act partially or impartially. Thus, they lose the explanatory power. As a result, the institutional design or cultural-moral norms are overestimated, and the illusion of a rapid progress towards corruption-free governance is made. The study aims to fix the latter shortcoming. A stag hunt game is used as a heuristic tool. Game theory and historical institutionalism are combined in it. This strategy is able to show that corruption as well as its contrast – good governance – are very stable equilibria. Both equilibria are maintained through the structure of competition – interaction among individuals. This interaction is a very important part of individual motivation to follow one of the equilibria, because it determines the possibility to overcome the collective action dillema – the central problem of politics. If the mutual expectations predict a fair strategy of the others, then good governance prevails.The opposite case is corruption. However, the most significant value of the study is that it provides concrete examples. The study shows how mutual expectations were influenced by the very first stag hunt – modernization – and how different equilibria have emerged. Using the method of process tracing, the modernization of Argentina and Chile is presented. It specifies how Argentina remained in corruption while Chile reached good governance. Modernization in Chile was gradual and covered heavy industry intensive regions. These circumstances were favourable for the development of right and left wing parties, and soon a genuine party competition emerged. The most significant social groups were represented through parties, and they could cooperate. Incentives for corruption declined. Meanwhile modernization in Argentina was rapid and covered light industry intensive regions. Such modernization prevented right and left forces to organize into parties. The most significant groups remained unrepresented and defended their interests through corruption. Even if this argument suits only Latin America during 1880–1940, it still delivers a clear message. The interaction among individuals is positively influenced by a genuine party competition in which all significant groups participate. Such a competition encourages mutual trust, improves mutual expectations and creates preconditions for a good governance.

The study seeks to provide an answer to the following question: why corruption is so resistent despite a convincing progress in adopting good governance institutions worldwide? Four main explanations are discussed. The theoretical discussion is accompanied and expanded by two case studies – Argentina and Chile. Both countries are very similiar regarding their social, economic, and political development. However, the level of corruption is vastly different. The study shows that predominant explanations of corruption, namely the principal-agent model and the cultural-moral argument, do not properly adress the question of individual motivation to act partially or impartially. Thus, they lose the explanatory power. As a result, the institutional design or cultural-moral norms are overestimated, and the illusion of a rapid progress towards corruption-free governance is made. The study aims to fix the latter shortcoming. A stag hunt game is used as a heuristic tool. Game theory and historical institutionalism are combined in it. This strategy is able to show that corruption as well as its contrast – good governance – are very stable equilibria. Both equilibria are maintained through the structure of competition – interaction among individuals. This interaction is a very important part of individual motivation to follow one of the equilibria, because it determines the possibility to overcome the collective action dillema – the central problem of politics. If the mutual expectations predict a fair strategy of the others, then good governance prevails.The opposite case is corruption. However, the most significant value of the study is that it provides concrete examples. The study shows how mutual expectations were influenced by the very first stag hunt – modernization – and how different equilibria have emerged. Using the method of process tracing, the modernization of Argentina and Chile is presented. It specifies how Argentina remained in corruption while Chile reached good governance. Modernization in Chile was gradual and covered heavy industry intensive regions. These circumstances were favourable for the development of right and left wing parties, and soon a genuine party competition emerged. The most significant social groups were represented through parties, and they could cooperate. Incentives for corruption declined. Meanwhile modernization in Argentina was rapid and covered light industry intensive regions. Such modernization prevented right and left forces to organize into parties. The most significant groups remained unrepresented and defended their interests through corruption. Even if this argument suits only Latin America during 1880–1940, it still delivers a clear message. The interaction among individuals is positively influenced by a genuine party competition in which all significant groups participate. Such a competition encourages mutual trust, improves mutual expectations and creates preconditions for a good governance.

The study seeks to understand why corruption is so resistant despite a convincing progress in adopting good governance institutions worldwide. It presents one of the very few success stories and aims to evaluate the possibilities to reduce corruption. The study contributes to the theoretical discussion by suggesting a heuristic tool – the stag hunt game – in which game theory and historical institutionalism are combined. This model is applied to the process of modernization analysis in Argentina and Chile. The critical junctures that shifted these countries towards different roads are highlighted. Argentina has remained in the stalemate of corruption, while Chile has managed to establish good governance.