Learning by fund-raising

Alvaro J. Name-Correa ()
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Alvaro J. Name-Correa: Universidad Carlos III de Madrid

Review of Economic Design, 2017, vol. 21, issue 4, No 4, 316 pages

Abstract: Abstract From experience, fund-raisers become more efficient solicitors. This paper offers a full characterization of the optimal solicitation strategy when there are learning economies. The characterization is recursive, and does not require equilibrium computations. Our main results are that (1) the fund-raiser may now solicit a “ net free-rider”—a donor whose contribution falls below the marginal solicitation cost; (2) the number of solicitations is non-monotonic in the learning rate; and (3) a solicitation technology with high overhead but low marginal costs is likely to be optimal if income distribution in the population is relatively homogenous. The complementary case with a decreasing returns to scale technology is also considered.

Keywords: Fund-raising; Solicitation cost; Charitable giving (search for similar items in EconPapers)
JEL-codes: H00 H30 H50 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10058-017-0207-7

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