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The Donor Problem: An Experimental Analysis of Beneficiary Empowerment

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  • Klaus Abbink
  • Matthew Ellman

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. These recipients may, however, withhold complaints to 'thank' the intermediary for selecting them. Furthermore, the intermediary may distort selection (for example, by picking richer recipients who feel less entitled) to reduce complaints. We design an experimental game representing the donor's problem. We compare two institutions. 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 divert more when they have selection power (correctly anticipating that gratitude for selection will reduce complaints). Our results identify a problem in combining selection and delivery tasks. The insights are also applicable to social funds, decentralisation and participatory projects.

Suggested Citation

  • Klaus Abbink & Matthew Ellman, 2010. "The Donor Problem: An Experimental Analysis of Beneficiary Empowerment," Journal of Development Studies, Taylor & Francis Journals, vol. 46(8), pages 1327-1344.
    • Handle: RePEc:taf:jdevst:v:46:y:2010:i:8:p:1327-1344
    DOI: 10.1080/00220380903428407
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    Citations

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    Cited by:

    1. Nadine Chlaß & Lata Gangadharan & Kristy Jones, 2015. "Charitable Giving and Intermediation," Monash Economics Working Papers 18-15, Monash University, Department of Economics.
    2. Parra, Daniel & Muñoz-Herrera, Manuel & Palacio, Luis A., 2021. "The limits of transparency in reducing corruption," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    3. Daniel Parra & Manuel Munoz-Herrera & Luis Palacio, 2019. "The limits of transparency as a means of reducing corruption," Working Papers 20190026, New York University Abu Dhabi, Department of Social Science, revised May 2019.
    4. Richard Kasa & Gábor Réthi & György Hauber & Krisztina Szegedi, 2023. "Simulation of Corruption Decisions—An Agent-Based Approach," Sustainability, MDPI, vol. 15(3), pages 1-18, January.
    5. Boly, Amadou & Gillanders, Robert, 2018. "Anti-corruption policy making, discretionary power and institutional quality: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 314-327.
    6. Nadine Chlaß & Lata Gangadharan & Kristy Jones, 2023. "Charitable giving and intermediation: a principal agent problem with hidden prices," Oxford Economic Papers, Oxford University Press, vol. 75(4), pages 941-961.
    7. Boly, Amadou & Gillanders, Robert, 2018. "Anti-corruption policy making, discretionary power and institutional quality: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 314-327.

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