Bridge Contracts in Africa: A Case Study of Orange Mali
African Economic Research Consortium
People incur transaction costs fitting their organizational arrangements into their surrounding property rights system. This paper analyzes organizational adaption to surroundings by examining which tool(s) from mechanism design people will use to solve moral hazard problems. Broadly, the weaker people’s surrounding property rights system, the more a principal will use tools from mechanism design, which provides greater autonomy to the agent. The paper finds support for this hypothesis by identifying ‘bridge contracts’, which Orange Mali uses to respond to weak property rights between urban and frontier communities in Mali. The paper proposes to use these findings to stimulate a ‘context specific’ approach to engineering economics. This involves developing mechanisms to encourage people to work towards social goals but also fit within specific communities. The paper applies this approach to random control trials.
Mobile money, mobile money, agents, contracts, mechanism design, random control trials