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Private Information and Altruism in Bidding Roscas

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  • Stefan Klonner

Abstract

This article studies how altruism improves allocations in a private information environment where strategic behaviour reduces economic welfare. A theoretical analysis establishes that, in an environment characterised by uncertainty and private information, outcomes of auctions in Rotating Savings and Credit Associations (Roscas) are more efficient when bidders' preferences are altruistic rather than selfish. A semi-parametric structural estimation technique for Rosca auctions is presented. A parametric structural estimation identifies interactions between group characteristics and bidder altruism. It is found that effective leadership and intra-group diversity are associated with a greater extent of bidder altruism and thus more efficient intra-Rosca allocations. Copyright © 2008 The Author(s).

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  • Stefan Klonner, 2008. "Private Information and Altruism in Bidding Roscas," Economic Journal, Royal Economic Society, vol. 118(528), pages 775-800, April.
  • Handle: RePEc:ecj:econjl:v:118:y:2008:i:528:p:775-800
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    Cited by:

    1. Ksoll, Christopher & Lilleør, Helene Bie & Lønborg, Jonas Helth & Rasmussen, Ole Dahl, 2016. "Impact of Village Savings and Loan Associations: Evidence from a cluster randomized trial," Journal of Development Economics, Elsevier, vol. 120(C), pages 70-85.
    2. Czura, Kristina & Klonner, Stefan, 2010. "The Tsunami and the Chit Fund- Evidence from the Indian Ocean Tsunami Hit on Credit Demand in South India," Proceedings of the German Development Economics Conference, Hannover 2010 46, Verein für Socialpolitik, Research Committee Development Economics.

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