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The Gates Effect in Public Goods Experiments: How Donors Focus on the Recipients Favored by the Wealthy

Luca Corazzini, Christopher Cotton (), Enrico Longo () and Tommaso Reggiani ()
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Enrico Longo: Unviersity of Venice

No 1471, Working Paper from Economics Department, Queen's University

Abstract: Experiments involving multiple public goods with contribution thresholds capture many features of charitable giving environments in which donors try to coordinate their contributions across various potential recipients. We present results from a laboratory experiment that introduces endowment and preference differences into such a framework to explore the impact of donor heterogeneity on public good success and payoffs. We observe that donors tend to focus on the recipients preferred by the wealthiest contributors, ignoring other recipients, as they try to coordinate their donations to ensure public good success. We refer to this collective focus on the preferred good of the wealthiest as the Gates Effect, showing that the public goods preferred by the wealthiest are more salient even in the absence of seed money, matching grants, misperception of payoffs. The Gates Effect can reduce inequality among donors groups that succeed in funding a public good; however, it also affects the philanthropic agenda, reducing the variety of public goods that receive funding.

Keywords: philanthropy; lab experiment; public goods; donor heterogeneity; donor strategy; crowdfunding; campaign contributions; fundraising (search for similar items in EconPapers)
JEL-codes: C91 C92 H40 H41 L31 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2021-11
New Economics Papers: this item is included in nep-cdm and nep-exp
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