Low-level fraud, bribery and exploitation is widespread in many developing countries and has been shown to have a detrimental impact on economic growth, undermine the quality of local services and harm tax revenues.
In a new paper, published in the journal International Economic Review, researchers from Loughborough University and the Massachusetts Institute of Technology (MIT), in the US, have suggested local authorities and governments adopt schemes that reward staff when citizens or businesses acknowledge fault.
They say that offering bonuses to police officers, traffic wardens, inspectors and other local government employees would dampen the appeal of extortion or overzealous enforcement.
Dr Antonio Russo, of Loughborough University's School of Business and Economics, said: "Our findings argue in favour of a simple self-reporting scheme – where acknowledging the fault, for example by a person paying a speeding ticket early, would result in a bonus for the issuing officer.
"Specifically, we make the case that government communication with citizens about their behaviour can reduce corruption.
"We show that allowing individuals or companies to report their failure to comply with rules and tying officials' rewards to these reports may help prevent corruption and ensure that regulations are enforced.
"We thus propose a way of empowering citizens by giving them the ability to influence the rewards of the officials with whom they interact.
"We show that the government can thus offer officials a high-powered incentive scheme that does not invite extortion or overzealous enforcement."
Similar schemes are already used effectively in some countries.
In Sierra Leone, the government set up a phone line to allow citizens to report episodes of corruption.
Our paper suggests this is a good idea, but that the government should also make the officials' rewards depend on citizens acknowledging their noncompliance (self-reporting), to increase the official's accountability.
Several countries have also implemented feedback schemes that allow users of public services to file complaints about officials, such as Ghana's Whistleblower Act and the Punjab Citizen Feedback Model.
Dr Russo said: "Petty corruption is unfortunately quite harmful to citizens in developing countries – as well as some developed ones as well.
"Accordingly, organizations such as the OECD, the United Nations and the World Bank, have fostered multiple initiatives aimed at tackling the problem and published numerous related reports.
"Some of these initiatives focus on communication with citizens at the receiving end of public services to deter corruption.
"More broadly, our proposed scheme relates to recent initiatives by developing countries, meant to empower citizens dealing with corrupt bureaucrats.
"For instance, in the 2011 Guarantee of Services Act, the Indian state of Karnataka allowed citizens to appeal against late or poor delivery of public services and require designated officials to pay a compensation if the appeal is upheld."
Read the paper, Petty corruption and citizen reports.