Politics, Religion, and Tax Incentives for Charitable Giving in South Korea

YoungRok Kim
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YoungRok Kim: Kobe University

Korean Economic Review, 2021, vol. 37, 141-155

Abstract: We present a model in which the agent reports a privately observed signal about the stochastic outcome of her action, while bearing a cost of misreporting her private information. If the agent receives a low payment contingent on her performance, it is very costly for the agent to misreport her information to the principal so that the principal makes a decision favorable to the agent. However, if the contingent compensation is too high, the principal will terminate the project unless the agent truthfully reports that the project is likely to give a high return. The optimal outcome is achieved by a contract with the fee structure loosely tied with the outcome, but the cost of lying is necessarily high.

Keywords: Tax Incentives; Charitable Giving; Religion; Political Orientation (search for similar items in EconPapers)
JEL-codes: H24 H31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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