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

Luca Corazzini, Marco Faravelli , Luca Stanca

Research output: Working paperDiscussion paper

Abstract / Description of output

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.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages39
Publication statusPublished - Mar 2007
Externally publishedYes

Publication series

NameESE Discussion Papers
No.159

Keywords / Materials (for Non-textual outputs)

  • auctions
  • lotteries
  • public goods
  • laboratory experiments
  • C91
  • D44
  • H41

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