Resource Allocation in Public Agencies: Experimental Evidence

• Published in: Journal of public economic theory 2010-08, Vol.12 (4), p.815-836
• Main Authors: CARDENAS, JUAN CAMILO, SETHI, RAJIV
• Format: Article
• Language: English
• Subjects: Child care; Discretionary power; Economic theory; Government spending; Public assistance programs; Public sector; Resource allocation; Social services; Studies
• ISSN: 1097-3923; 1467-9779
• DOI: 10.1111/j.1467-9779.2010.01475.x

Many organizations, including philanthropies and public agencies, require their employees to make resource allocation decisions that are intended to serve a broad social purpose or mission. In most cases, the criteria on the basis of which scarce funds are to be allocated are imprecisely specified, leaving agents with considerable discretionary power. This paper reports results from an experiment that explores the manner in which such power is exercised. Using a sample of public servants working in education, health, child care, and nutrition programs in Colombia, and a sample of potential and actual beneficiaries of such programs, we attempt to identify the set of recipient attributes that induce the most generous responses from officials. This is done using a design we call the “distributive dictator game,” which requires officials to rank recipients, with the understanding that a higher ranking corresponds to an increased likelihood of getting a voucher convertible into cash. We find that women (especially widows), individuals with many minor dependents, and refugees from political violence are generally favored. We also find significant interaction effects between ranker and recipient attributes, with rankings varying systematically by ranker age and gender.