A Prize to Give for: An Experiment on Public Good Funding Mechanisms

Luca Corazzini (), Marco Faravelli () and Luca Stanca ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper investigates fund-raising mechanisms based on a prize as a way to overcome free riding in the private provision of public goods, under the assumptions of income heterogeneity and incomplete information about income levels. We compare experimentally the performance of a lottery, an all-pay auction and a benchmark voluntary contribution mechanism. We find that prize-based mechanisms perform better than voluntary contribution in terms of public good provision after accounting for the cost of the prize. Comparing the prize-based mechanisms, total contributions are significantly higher in the lottery than in the all-pay auction. Focusing on individual income types, the lottery outperforms voluntary contributions and the all-pay auction throughout the income distribution.

Keywords: Auctions; Lotteries; Public Goods; Laboratory Experiments (search for similar items in EconPapers)
JEL-codes: C91 D44 H4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-pbe
Date: 2007-08
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Related works:
Working Paper: A Prize to Give for: An Experiment on Public Good Funding Mechanisms (2007)
Working Paper: A Prize to Give for: An Experiment on Public Good Funding Mechanisms (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:edn:esedps:159

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