Good-Citizen Lottery

Duk Gyoo Kim

No 2025rwp-239, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: This paper examines a novel mechanism to collectively minimize the production of public bads without the burden of an external budget: a penalty-funded good-citizen lottery. Good citizens are typically not rewarded for their prosocial actions, which weakens their incentives to reduce the production of public bads. This study employs a gametheoretic model in which a lottery awards one good citizen a prize funded by penalties imposed on bad citizens. Under a reasonable set of parameters, the good-citizen lottery decreases the likelihood of prosocial behavior as the population size increases. This result theoretically aligns with the asymptotic free-riding in voluntary contributions for the production of public goods. However, experimental evidence reveals the opposite pattern: the proportion of good behavior increases with group size. This effect is especially pronounced among individuals who subjectively overestimate small probabilities of winning the good-citizen lottery.

Keywords: Lottery; Public bads; Imperfect monitoring; Laboratory experiments (search for similar items in EconPapers)
Pages: 25pages
Date: 2025-03
New Economics Papers: this item is included in nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:yon:wpaper:2025rwp-239

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