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Provider Incentives and Delivery of Developmental Goods

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  • Mishra, Ajit
  • Sarangi, Sudipta

Abstract

We use a donor-provider-agent framework to study the delivery of developmental goods (i.e. aid, credit, technology transfer to poor). The need to provide incentives for the intermediate provider has been a key issue in the recent academic as well as non-academic discourses. We show that the use of high-powered incentives can lead to breakdown of communications between the provider and the agents. We study the interplay between incentives and communication failure in the presence of motivated providers who derive benefits from helping the disadvantaged.

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File URL: http://opus.bath.ac.uk/22126/1/BERP1410.pdf
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Bibliographic Info

Paper provided by University of Bath, Department of Economics in its series Department of Economics Working Papers with number 22126.

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Date of creation: Dec 2010
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Handle: RePEc:eid:wpaper:22126

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Postal: Claverton Down, Bath BA2 7AY
Phone: +44 (0)1225 383799
Fax: +44 (0)1225 323423
Web page: http://www.bath.ac.uk
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Keywords: developmental goods; communication; incentives; motivated provider;

References

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  1. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
  2. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  3. William Easterly & Tobias Pfutze, 2008. "Where Does the Money Go? Best and Worst Practices in Foreign Aid," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 29-52, Spring.
  4. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
  5. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
  6. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June.
  7. Copestake, James, 2007. "Mainstreaming Microfinance: Social Performance Management or Mission Drift?," World Development, Elsevier, vol. 35(10), pages 1721-1738, October.
  8. Tirole, J., 1993. "The Internal Organization of Government," Working papers 93-11, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Timothy Besley & Maitreesh Ghatak, 2003. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 2202, London School of Economics and Political Science, LSE Library.
  10. Austen-Smith, David, 1994. "Strategic Transmission of Costly Information," Econometrica, Econometric Society, vol. 62(4), pages 955-63, July.
  11. Roland Benabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Wiley Blackwell, vol. 70(3), pages 489-520, 07.
  12. Suman Ghosh & Eric Van Tassel, 2008. "A Model of Mission Drift in Microfinance Institutions," Working Papers 08003, Department of Economics, College of Business, Florida Atlantic University.
  13. Bardhan, Pranab & Mookherjee, Dilip, 2005. "Decentralizing antipoverty program delivery in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 675-704, April.
  14. Farrell, Joseph, 1995. "Talk Is Cheap," American Economic Review, American Economic Association, vol. 85(2), pages 186-90, May.
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