The Folklore Effect: The Cognitive Psychology Phenomenon Underlying Systemic Institutional Corruption

This article examines the “Folklore Effect” framework as a theoretical explanation for predictable patterns of institutional corruption and misconduct. Drawing on prospect theory and behavioural economics, the framework posits that officials engaged in wrongdoing undergo a four-step psychological cascade: initial misconduct, fear-driven loss aversion, narrative distortion, and truth suppression, which together perpetuate systemic corruption. The analysis explores both the theoretical foundations of this model and the proposed “cognitive warfare” strategy designed to expose and remediate such patterns. The article critically evaluates the framework’s conceptual coherence, empirical grounding, and practical implications for systemic legal reform, while addressing both its potential contributions and its methodological and ethical concerns.