Beat a Cheat: Hotlines to Taget the Poor
AbstractThe problem with public spending programs intended for the poor is that they often enrich the ineligible. This paper introduces a hotline mechanism to target the poor efficiently. The poor are induced to tell on cheaters. The rich are deterred from cheating because they will be identified, audited and fined if they do so. This mechanism has a unique Nash equilibrium outcome and is robust to collusion. Unlike standard targeting techniques, it does not rely on the rich and poor having different preferences or abilities to select between them. Further, it resembles Beat A Cheat, a successful program to combat welfare fraud in Britain where informants call a toll free number to report welfare cheats.
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Bibliographic InfoPaper provided by Chicago - Graduate School of Business in its series Papers with number 22.
Length: 31 pages
Date of creation: 2000
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF CHICAGO, H.G.B. ALEXANDER FOUNDATION GRADUATE SCHOOL OF BUSINESS, CHICAGO ILLINOIS 60637 U.S.A.
Web page: http://gsb.uchicago.edu/
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POVERTY ; SOCIAL WELFARE;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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