Browsing by Author "Yildirim, H"

Now showing 1 - 11 of 11
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    A Theory of Outsourced Fundraising: Why Dollars Turn into 'Pennies for Charity'
    (Economic Research Initiatives at Duke (ERID) Working Paper, 2014-12-06) Paskalev, Z; Yildirim, H
    Charities frequently rely on professional solicitors whose commissions exceed half of total donations. To understand this practice, we propose a principal-agent model in which the charity optimally offers a higher commission to a more “efficient” solicitor, raising the price of giving significantly. Outsourcing is, therefore, profitable for the charity only if giving is very price-inelastic. This, however, clashes with empirical evidence. We show that paid solicitations can benefit the charity if: (1) donors are unaware; (2) donors have intense “warm-glow” preferences; or (3) the charity worries mostly about watchdog ratings. We argue that informing the public of the mere existence of paid solicitations may be the most effective policy available.
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    Andreoni-McGuire algorithm and the limits of warm-glow giving
    (Journal of Public Economics, 2014-01-01) Yildirim, H
    We provide a full equilibrium characterization of warm-glow giving à la Andreoni (1989, 1990) by extending the Andreoni-McGuire (1993) algorithm. We then generalize and offer an intuitive meaning to the large-economy crowding-out results by Ribar and Wilhelm (2002). The algorithm indexes individuals according to their free-riding levels of the public good. This level is finite for an individual whose donation is always dictated by some altruism or concern for charity. We show that if all individuals have finite free-riding levels, then the crowding-out is complete in a large economy. If, on the other hand, a non-negligible fraction of the population never free rides, then the crowding-out is zero in a large economy. We discuss implications of these extreme crowding-out predictions for charitable behavior and fund-raising strategies. © 2013 Elsevier B.V.
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    Biased experts, majority rule, and the optimal composition of committee
    (Games and Economic Behavior, 2021-05-01) Name Correa, AJ; Yildirim, H
    An uninformed principal appoints a committee of experts to vote on a multi-attribute alternative, such as an interdisciplinary project. Each expert evaluates one attribute and is biased toward it (specialty bias). The principal values all attributes equally but has a status quo bias, reflecting the organizational cost of a change. We study whether the principal would compose the committee of more or less specialty-biased experts. We show that her optimal composition is nonmonotonic in the majority rule, with the most biased experts appointed under intermediate rules. We then show that the principal would be less concerned about the committee composition if its members can be uninformed, as they induce the informed to vote less strategically. Surprisingly, although uninformed members lower the quality of the committee's decision, the principal may prefer to have some when its composition is suboptimal, and the majority rule is sufficiently extreme, such as the unanimity.
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    Credit attribution and collaborative work
    (Journal of Economic Theory, 2021-07-01) Ozerturk, S; Yildirim, H
    We examine incentives in research teams where the market, such as the scientific community, attributes credit for success based on its inference of individual efforts. A social planner who could commit to credit ex ante would induce more effort from higher ability agents in exchange for less credit per unit effort. Lacking such commitment, the Bayesian market assigns credit proportional to perceived effort. This inability to distort credit per unit effort leads to an incentive reversal across projects. For “easy” projects with a concave marginal cost of effort, in the unique interior equilibrium, higher ability agents work less and receive lower credit/utility, while the opposite holds for “difficult” projects with a sufficiently convex marginal cost of effort. Moreover, equilibrium may involve over-investment by some team members who expect to receive most of the credit. The incentives to team up and the implications of effort observability on credit attribution are also investigated.
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    “Giving” in to social pressure
    (Games and Economic Behavior, 2016-09-01) Name-Correa, AJ; Yildirim, H
    © 2016 Elsevier Inc.We develop a theory of charitable giving in which donors feel social pressure from a direct solicitation. We show that equilibrium donations are concentrated around a social norm. Despite a higher level of the public good, relatively poor and/or low altruism givers fare worse under social pressure and would avoid the solicitor at a cost. Aggregate donor welfare improves to the extent that the added social motive alleviates the underprovision of the public good; however, overprovision may result. Our theory therefore predicts a light-handed regulation for charitable solicitations, which is consistent with their exemption from the popular Do Not Call list in the U.S. We further show that contrary to pure altruism, a more equal income distribution may produce more of the public good. In fundraising campaigns where a social norm is not apparent, one may emerge endogenously if donors are not too heterogeneous.
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    Information, Competition, and the Quality of Charities
    (2015-05-16) Krasteva, S; Yildirim, H
    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.
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    Managing dynamic competition
    (American Economic Review, 2002-09-01) Lewis, TR; Yildirim, H
    In many important high-technology markets, including software development, data processing, communications, aeronautics, and defense, suppliers learn through experience how to provide better service at lower cost. This paper examines how a buyer designs dynamic competition among rival suppliers to exploit learning economies while minimizing the costs of becoming locked in to one producer. Strategies for controlling dynamic competition include the handicapping of more efficient suppliers in procurement competitions, the protection and allocation of intellectual property, and the sharing of information among rival suppliers. (JEL C73, D44, L10).
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    Managing Switching Costs in Multiperiod Procurements with Strategic Buyers
    (2005) Lewis, TR; Yildirim, H
    This article examines the use of switching costs by long-lived strategic buyers to manage dynamic competition between rival suppliers. The analysis reveals how buyers may employ switching costs to their advantage. We show that when switching costs are high, a buyer may induce suppliers to price more competitively by credibly threatening to replace the incumbent supplier with his rivals. The implications of this finding for adoption of technology and firm organization are explored in settings in which the buyer is integrated with the suppliers and where the buyer is an outsourcer.
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    On the endogeneity of Cournot-Nash and Stackelberg equilibria: Games of accumulation
    (Journal of Economic Theory, 2005-01-01) Romano, R; Yildirim, H
    We characterize equilibria of games with two properties: (i) Agents have the opportunity to adjust their strategic variable after their initial choices and before payoffs occur; but (ii) they can only add to their initial amounts. The equilibrium set consists of just the Cournot-Nash outcome, one or both Stackelberg outcomes, or a continuum of points including the Cournot-Nash outcome and one or both Stackelberg outcomes. A simple theorem that uses agents' standard one-period reaction functions and the one-period Cournot-Nash and Stackelberg equilibria delineates the equilibrium set. Applications include contribution, oligopoly, and rent-seeking games. © 2003 Elsevier Inc. All rights reserved.
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    Proposal power and majority rule in multilateral bargaining with costly recognition
    (Journal of Economic Theory, 2007-09-01) Yildirim, H
    This paper studies a sequential bargaining model in which agents expend efforts to be the proposer. In equilibrium, agents' effort choices are influenced by the prize and cost effects. The (endogenous) prize is the difference between the residual surplus an agent obtains when he is the proposer and the payment he expects to receive when he is not. Main results include: (1) under the unanimity voting rule, two agents with equal marginal costs propose with equal probabilities, regardless of their time preferences; (2) under a nonunanimity rule, however, the more patient agent proposes with a greater probability; (3) while, under the unanimity rule, the social cost decreases in group heterogeneity, it can increase under a nonunanimity rule; and (4) when agents are identical, the unanimity rule is socially optimal. © 2006 Elsevier Inc. All rights reserved.
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    Social pressure, transparency, and voting in committees
    (Journal of Economic Theory, 2019-09) Name-Correa, AJ; Yildirim, H