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A Note on the Theory of Charitable Fund‐raising: The Role of Refunds

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  • Paul Pecorino
  • Akram Temimi

Abstract

Andreoni (1998, Journal of Political Economy106, 1186–1213) shows that a small amount of seed money from the government can generate substantial additional private donations toward the provision of a public good, when there is a threshold level of provision below which no benefits are achieved. We argue that Andreoni's solution can be extended to a mechanism where refunds are possible. We then argue that a greater “bang per buck” may be achieved if the seed money is targeted to cover the administrative costs of providing refunds.

Suggested Citation

  • Paul Pecorino & Akram Temimi, 2001. "A Note on the Theory of Charitable Fund‐raising: The Role of Refunds," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(3), pages 341-345, July.
    • Handle: RePEc:bla:jpbect:v:3:y:2001:i:3:p:341-345
    DOI: 10.1111/1097-3923.00071
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    1. Potters, J.J.M. & Sefton, M. & Vesterlund, L., 2001. "Why Announce Leadership Contributions? An Experimental Study of the Signaling and Reciprocity Hypotheses," Other publications TiSEM bf38dd2e-5f10-46ae-bb21-7, Tilburg University, School of Economics and Management.

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