To lift Ugandans from the current Multidimensional Poverty Index of 42.1%,, the Government of Uganda allocated about one trillion Ugandan shillings from 2022 to 2023 towards operationalizing the Parish Development Model (PDM), a program that provides loans to promote projects run by each parish. Members of each Parish group co-guarantee one another to ensure successful implementation of their approved project. The success of such programs is based on the assumptions that the actors will behave cooperatively even when they have the incentive to default on their obligations. This assumption contrasts the results of other similarly run governmental programs, in which individual borrowers deliberately defaulted to have group members pay back loans on their behalf.
This project will evaluate the success of the PDM by testing the cooperation and strategic behaviors of PDM group members using experimental design based on the prisoner’s dilemma. Thus, this study will assess if group members with good credit are willing to pay for the defaults of other members, or if individual members of the PDM will act strategically to maximize their own utility. .
An experiment will be conducted in three out of eight districts in the Lango sub-region using purposive and multi-stage sampling. From each district, two sub-counties will be randomly selected and, in each sub-county, two parishes will then be randomly selected, resulting in the sample size of approximately thirty individuals from twelve parishes. The experiment will follow a one stage prisoner’s dilemma with the following setup and rules:
There is a possibility of winning a total of UGX 10,000, UGX 6,000, UGX 2,000, and UGX 0, depending on the choices of the person and their randomly selected partner on how to handle the money. The person will not know the identity of their partner.
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