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

Lucca 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: 2007-03
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http://www.econ.ed.ac.uk/papers/id159_esedps.pdf

Related works:
Journal Article: A Prize To Give For: An Experiment on Public Good Funding Mechanisms (2010) Downloads
Working Paper: A Prize to Give for: An Experiment on Public Good Funding Mechanisms (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:159

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