A Coordination Game Model of Charitable Giving and Seed Money Effect

Kentaro Hatsumi

ISER Discussion Paper from Institute of Social and Economic Research, Osaka University

Abstract: We point out that if potential donors for a charity project possess the warm-glow properties in their preferences, their behavior can be represented by a coordination game. Accordingly, we construct a simultaneous incomplete information game model of charitable giving on the basis of a simple global coordination game. We demonstrate that by considering the threshold shift effect of seed money exclusively, the proportion of donors and the total amount of donation strictly and continuously increase according to the amount of seed money. This result is quite compatible with the field experimental study of List and Lucking-Reiley [List, J. A., Lucking-Reiley, D., 2002. The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign. Journal of Political Economy 110 (1), 215-233].

Date: 2009-04
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Persistent link: http://EconPapers.repec.org/RePEc:dpr:wpaper:0736

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