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.
Faravelli, M., Stanca, L.M., & Corazzini, L. (2007). A Prize to Give for: An Experiment on Public Good Funding Mechanisms [Working paper del dipartimento].
|Citazione:||Faravelli, M., Stanca, L.M., & Corazzini, L. (2007). A Prize to Give for: An Experiment on Public Good Funding Mechanisms [Working paper del dipartimento].|
|Titolo:||A Prize to Give for: An Experiment on Public Good Funding Mechanisms|
|Autori:||Faravelli, M; Stanca, LM; Corazzini, L|
|Carattere della pubblicazione:||Scientifica|
|DCMI:||Working paper del dipartimento|
|Data di pubblicazione:||2007|
|Appare nelle tipologie:||99 - Altro|