Prompted to Be Good: The Impact of Certification on the Quality of Charities
AbstractIn this study we model how certification affects managers’ choice of the quality of the nonprofit organizations they run. We analyze a market with one representative charity, run by a manager with some preference for the provision of a charitable good, one donor, and a certification agency. We assume that the nature of the charitable good does not allow for partial provision, thus, the charity can be of two types only: a good charity that spends all its resources on the charitable good, and a bad one that diverts all its resources for the private consumption of its manager (for-profit in disguise). We show that for a wide parameter range, the presence of an honest certifier in the market increases the incentives for managers to choose good charities, leading to an improvement in the market as the share of good charities increases.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp320.
Date of creation: Mar 2007
Date of revision:
Contact details of provider:
Postal: P.O. Box 882, Politickych veznu 7, 111 21 Praha 1
Phone: (+420) 224 005 123
Fax: (+420) 224 005 333
Web page: http://www.cerge-ei.cz
More information through EDIRC
Quality assurance; certification; moral hazard; experience goods. versus second–best strategic policy.;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-30 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
- Mary Gugerty, 2009. "Signaling virtue: voluntary accountability programs among nonprofit organizations," Policy Sciences, Springer, vol. 42(3), pages 243-273, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jana Koudelkova).
If references are entirely missing, you can add them using this form.