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The Samaritan's DilemmaThe Political Economy of Development Aid$
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Clark C. Gibson, Krister Andersson, Elinor Ostrom, and Sujai Shivakumar

Print publication date: 2005

Print ISBN-13: 9780199278855

Published to Oxford Scholarship Online: October 2005

DOI: 10.1093/0199278857.001.0001

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A Formal Analysis of Incentives in Strategic Interactions Involving an International Development Cooperation Agency

A Formal Analysis of Incentives in Strategic Interactions Involving an International Development Cooperation Agency

Chapter:
(p.87) 5 A Formal Analysis of Incentives in Strategic Interactions Involving an International Development Cooperation Agency
Source:
The Samaritan's Dilemma
Author(s):

Clark C. Gibson

Publisher:
Oxford University Press
DOI:10.1093/0199278857.003.0005

Initial conditions in the recipient almost always reflect tragedies of the commons, public good problems, and principal-agent problems. Two broad motives/mechanisms behind the decision on the part of a developed country to enter a recipient country with aid are identified. The first is altruism and warm glow. The second is increased per capita GDP via growth factors including essential capital investment, overcoming market failure in the recipient countries. Using game theory, the strategic implications of this mix of initial conditions and donor motives on donor outcomes are studied. It is shown that aid dependency is a likely outcome of this mix.

Keywords:   game theory, strategic interaction, Samaritan’s Dilemma, aid conditionality, aid tournaments, corruption, warm-glow effects

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