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Gestational Surrogacy Contracts: Altruistic or Commercial ?


  • Swapnendu Banerjee


The paper provides an analytical structure to endogenize the optimal gestational surrogacy contract in terms of a simple moral hazard framework. The study shows that altruistic surrogacy is optimal only if the surrogate has lower outside option and is sufficiently altruistic. Otherwise commercial surrogacy is optimal. We also show that for lower outside option greater social ignominy makes the surrogacy contract relatively more altruistic but the reverse happens when the surrogate has higher outside option. The author explores alternative model specifications and find a case where commercial surrogacy is always optimal irrespective of altruism, outside option and social ignominy.

Suggested Citation

  • Swapnendu Banerjee, 2008. "Gestational Surrogacy Contracts: Altruistic or Commercial ?," Working Papers id:1811, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:1811
    Note: Institutional Papers

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    References listed on IDEAS

    1. Patrick Bolton & Mathias Dewatripont, 2005. "Contract Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025760, January.
    2. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
    3. Kevin Murdock, 2002. "Intrinsic Motivation and Optimal Incentive Contracts," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 650-671, Winter.
    4. Roland BĂ©nabou & Jean Tirole, 2003. "Intrinsic and Extrinsic Motivation," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 489-520.
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