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Single versus multiple-prize all-pay auctions to finance public goods: An experimental analysis

Marco Faravelli and Luca Stanca ()

Journal of Economic Behavior & Organization, 2012, vol. 81, issue 2, 677-688

Abstract: This paper presents an experimental comparison of single and multiple-prize all-pay auctions as fundraising mechanisms to finance public goods. We consider a setting characterized by heterogenous incomes and incomplete information, where single and multiple-prize incentive mechanisms are predicted to raise the same overall contribution, but different contributions by income level. We find that overall, for a given total prize sum, a single large prize generates higher contributions to the public good than three smaller prizes. As predicted by the theory, a single prize provides a more effective incentive for high-income individuals. However, contrary to the theoretical predictions, multiple prizes do not provide a more effective incentive for low-income individuals.

Keywords: Incentive mechanisms; Multiple prizes; All-pay auctions; Public goods; Laboratory experiments (search for similar items in EconPapers)
JEL-codes: C91 D44 H41 (search for similar items in EconPapers)
Date: 2012
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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:677-688