Gift-giving, Quasi-Credit and Reciprocity
AbstractThe fluctuations in incomes inherent in rural communities can be attenuated by reciprocal assistance. A model of reciprocal assistance based upon rational action and voluntary participation is presented. Individuals provide assistance only if the costs of so doing are outweighed by the benefits from expected future reciprocation. A distinction is made between general reciprocity where the counter obligation is expected but not certain and balanced reciprocity where there is a firm counter obligation. This firm counter obligation is reflected by including a loan or quasi-credit element in any assistance. It is shown how this can increase the assistance given and it may explain the widespread use of quasi-credit in rural communities. Moreover it is shown that for a range of parameter values consistent with evidence from three villages in southern India, a simple scheme of gift-giving and quasi-credit can do almost as well as theoretically better but more complicated schemes.
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Bibliographic InfoPaper provided by Department of Economics, University of St. Andrews in its series Discussion Paper Series, Department of Economics with number 200005.
Date of creation: 15 Dec 2000
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Other versions of this item:
- Jonathan P. Thomas & Tim Worrall, 2000. "Gift-giving, Quasi-Credit and Reciprocity," Development and Comp Systems 0004005, EconWPA.
- Jonathan P. Thomas & Tim Worrall, 2000. "Gift-giving, Quasi-Credit and Reciprocity," Keele Department of Economics Discussion Papers (1995-2001) 2000/20, Department of Economics, Keele University.
- Jonathan P. Thomas & Tim Worrall, 2002. "Gift-Giving, Quasi-Credit and Reciprocity," CESifo Working Paper Series 687, CESifo Group Munich.
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-10-29 (All new papers)
- NEP-MFD-2001-10-29 (Microfinance)
- NEP-MIC-2001-10-29 (Microeconomics)
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