A Model of Challenge Funds: How Funding Availability and Selection Rigor Affect Project Quality

Raphael Boleslavsky, Bruce Carlin and Christopher Cotton
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Raphael Boleslavsky: University of Miami
Bruce Carlin: UCLA

No 1470, Working Paper from Economics Department, Queen's University

Abstract: Challenge funds (CF) induce competition between grant applicants as they develop proposals to address important social problems. We develop a game-theoretic model to study how funding availability and proof of concept requirements (e.g., pilots or other forms of early-stage screening) influence investments by applicants and the ultimate success of the CF. Larger budgets and more rigorous proof of concept requirements can reduce applicant investments and lead to less effective funding initiatives. The results show how the design of a CF affects the incentives of those competing for funding, and how the most effective CF design needs to carefully consider how the NGOs or researchers applying for funding will respond to a change in incentives. Otherwise, steps taken to improve the quantity or quality of funded projects can backfire and decrease overall funding effectiveness.

Keywords: Challenge Funds; Grants; Project Evaluation; Pilot Studies; Funding Allocation; Evidence Based Funding (search for similar items in EconPapers)
JEL-codes: D83 H43 H57 H83 H87 O22 O35 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2021-11
New Economics Papers: this item is included in nep-gth and nep-ppm
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