Andreoni-McGuire algorithm and the limits of warm-glow giving
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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.
Published Version (Please cite this version)10.1016/j.jpubeco.2013.09.005
Publication InfoYildirim, Huseyin (2014). Andreoni-McGuire algorithm and the limits of warm-glow giving. Journal of Public Economics, 114. pp. 101-107. 10.1016/j.jpubeco.2013.09.005. Retrieved from http://hdl.handle.net/10161/13114.
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Professor of Economics
Professor Yildirim's recent research concerns charitable giving, sequencing of bilateral negotiations, and the value of (non-)blind review. His papers have appeared in top economics journals such as American Economic Review, Review of Economic Studies, Journal of Economic Theory, and RAND journal of Economics.