MODELLING THE LAW ENFORCEMENT MECHANISM OF COMBATING MONEY LAUNDERING IN INDONESIA: A GAME THEORETICAL APPROACH

I Wayan Yasa Nugraha, Dr. Rimawan Pradiptyo. M.Sc,

2012 | Tesis | S2 Ilmu Ekonomi dan Studi Pembangunan

-

This thesis is aimed to model the law enforcement mechanism of combating money laundering in Indonesia by utilizing game theory. The mechanism is modelled in two-stage games. Stage 1 is modelled as a 2 player 2×2 simultaneous inspection game and is played by two representative agents, namely Offender and PPATK. The analysis of stage 1 adopts the refinement of Tsebelis’ Inspection Game (1989) made by Pradiptyo (2007), which then results the mixed strategy equilibrium. Next, stage 2 illustrates two scenarios of sequential game, which are played by Offender and Law Enforcer (Investigator, Prosecutor, and Judge are assumed as one player), i.e. Bribery Game (Stage 2a) and Extortion Game (Stage2b). The games in stage 2 are analyzed using backward induction method in order to find the sub-game perfect nash equilibrium. The result of analysis on stage 1 suggests that PPATK’s inspection strategy and benefits (BIP) become the Offender’s consideration to commit money laundering. Conversely, PPATK’s decision of conducting inspection is affected by Offender’s net benefit of committing money laundering (ULO – CLO) and the cost of inspection (–CIP). At stage 2, Offender’s net benefit of committing money laundering (ULO – CLO) and level of punishment (–DLO) become the factor for bribery and extortion to happen However, Law Enforcer’s net benefit of enforcing the law (BEL – CEL) plays important point to reduce the occurrence probability of both obstructions of justice.

Kata Kunci : money laundering, game theory, inspection game, bribery game, and extortion game.