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The Donor Problem

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Author Info
Klaus Abbink
Matthew Ellman

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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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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 796.

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Date of creation: Oct 2004
Date of revision: Jan 2005
Handle: RePEc:upf:upfgen:796

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Related research
Keywords: Development; Entitlement; Experiments; Fairness; Intermediaries; Monitoring; Targeting; Punishment.;

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Find related papers by JEL classification:
C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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Cited by:
(explanations, 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.)

  1. 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 2006-24, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  2. Ben D'Exelle & Arno Riedl, 2008. "Elite Capture, Political Voice and Exclusion from Aid: An Experimental Study," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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