Information, Competition, and the Quality of Charities

33 Pages Posted: 13 Jun 2015

See all articles by Huseyin Yildirim

Huseyin Yildirim

Duke University - Department of Economics

Silvana Krasteva

Texas A&M University

Multiple version iconThere are 2 versions of this paper

Date Written: May 16, 2015

Abstract

We propose a model of charity competition in which informed giving alone can explain quality heterogeneity across similar charities. It is this heterogeneity that also creates the demand for information. In equilibrium, too few donors pay to be informed; but interestingly, informed giving may increase with the cost of information. This is true if the charitable market is highly competitive or if private consumption is a strong substitute to giving – both of which are supported by evidence.

Keywords: informed giving, quality of charity, competition, all-pay auctions

JEL Classification: H00, H30, H50

Suggested Citation

Yildirim, Huseyin and Krasteva, Silvana Simeonova, Information, Competition, and the Quality of Charities (May 16, 2015). Economic Research Initiatives at Duke (ERID) Working Paper No. 188. Available at SSRN: https://ssrn.com/abstract=2617490 or http://dx.doi.org/10.2139/ssrn.2617490

Huseyin Yildirim (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1805 (Phone)
919-684-8974 (Fax)

Silvana Simeonova Krasteva

Texas A&M University ( email )

Langford Building A
798 Ross St.
College Station, TX 77843-3137
United States
(979) 845-7384 (Phone)

HOME PAGE: http://econweb.tamu.edu/skrasteva/

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