A Theoretical Model for Preserving the Endowment and Charities in the Third Sector of the Economy with Asymmetric Information

Document Type : Research Paper

Authors
Mahdi Toghyani
Morteza Derakhshan
Khadijeh Nasroallahi
10.30497/ies.2014.1602
Abstract
This article aims to explain the importance and necessity of studies about the third sector of economy (endowment and charities) and the extent of this sector in the new world, and also survey about the guidelines of preserving the third sector. For this purpose, firstly we identify the challenges of third sector, and analyze and evaluate the asymmetric information challenge with the incentive theory approach, as the most important challenge in the economic theory of the third sector. We extract the range and variety of incentive challenge derived from asymmetric information problem in the third sector, using library method and interviews with experts, and then we try to offer a theoretical model to overcome this challenge in the case of  the endowments and charities, using sediment of knowledge in the contract theory and also Shia jurisprudence. For doing this, we interpret three general categories and 10 major kinds of asymmetric information in the third sector and then offer the solution according to joint features of every category. Finally we conclude that screening, signaling, monitoring, guarantee and setting a contract introduction as the most important guidelines for solving the asymmetric information problem in the third sector.
Keywords
third sector economics
waqf economics
voluntary sector
contract theory
asymmetric information