Intermediation by aid agencies
This paper models aid agencies as financial intermediaries that do not make a financial return to depositors, since the depositors' concern is to transfer resources to investor-beneficiaries. This leads to a significant problem of verification of the agencies' activities. One solution to this problem is for an agency to employ altruistic workers at below-market wages: workers can monitor the agency's activity more closely than donors, and altruistic workers would not work at below- market rates unless the agency were genuinely transferring resources to beneficiaries. We consider conditions for this solution to be incentive compatible.
|Date of creation:||09 Dec 2004|
|Note:||Type of Document - pdf; pages: 26. University of Birmingham, Department of Economics Working Paper, 04-22 (3 November 2004)|
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