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The Donor Problem

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  • Klaus Abbink
  • Matthew Ellman

Abstract

Donors often rely on local intermediaries to deliver benefits to target beneficiaries. Each selected recipient observes if the intermediary under-delivers to them, so they serve as natural monitors. However, they may withhold complaints when feeling unentitled or grateful to the intermediary for selecting them. Furthermore, the intermediary may distort selection (e.g. by picking richer recipients who feel less entitled) to reduce complaints. We design an experimental game representing the donor's problem. In one treatment, the intermediary selects recipients. In the other, selection is random - as by an uninformed donor. In our data, random selection dominates delegation of the selection task to the intermediary. Selection distortions are similar, but intermediaries embezzle more when they have selection power and (correctly) expect fewer complaints.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 151.

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Date of creation: Jan 2005
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Handle: RePEc:bge:wpaper:151

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Keywords: Development; Entitlement; Experiments; Fairness; Intermediaries; Monitoring; Targeting; Punishment;

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Cited by:
  1. Ben D'Exelle & Arno Riedl, 2008. "Elite Capture, Political Voice and Exclusion from Aid: An Experimental Study," CESifo Working Paper Series 2400, CESifo Group Munich.
  2. Gelkha Buitrago & Werner Güth & M. Vittoria Levati, 2006. "Does anticipated aid create the need it wants to avoid? An experimental investigation," Papers on Strategic Interaction, Max Planck Institute of Economics, Strategic Interaction Group 2006-24, Max Planck Institute of Economics, Strategic Interaction Group.
  3. Buitrago, Gelkha & Gueth, Werner & Levati, Maria Vittoria, 2009. "On the relation between impulses to help and causes of neediness: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(1), pages 80-88, January.

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