This paper investigates fund-raising mechanisms based on a prize as a way to overcome free riding in the private provision of public goods. We focus on an environment characterised by income heterogeneity and incomplete information about income levels. Our analysis compares 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. Contrary to the theoretical predictions, contributions are significantly higher in the lottery than in the all-pay auction, both overall and by individual income types. We show that a simple theoretical framework that takes into account the effect of competition on agents' concern for social efficiency can help explain our own results, and some of the findings of closely related experiments in the literature.
Corazzini, L., Faravelli, M., & Stanca, L.M. (2010). A prize to give for: an experiment on public good funding mechanisms. ECONOMIC JOURNAL, 120(3), 944-967.
|Citazione:||Corazzini, L., Faravelli, M., & Stanca, L.M. (2010). A prize to give for: an experiment on public good funding mechanisms. ECONOMIC JOURNAL, 120(3), 944-967.|
|Tipo:||Articolo in rivista - Articolo scientifico|
|Carattere della pubblicazione:||Scientifica|
|Titolo:||A prize to give for: an experiment on public good funding mechanisms|
|Autori:||Corazzini, L; Faravelli, M; Stanca, LM|
|Data di pubblicazione:||2010|
|Appare nelle tipologie:||01 - Articolo su rivista|