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Should lotteries offer discounts on multiple tickets?

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  • Damianov, Damian S.

Abstract

In a complete information setting we show that the standard lottery–in which each lottery ticket is offered for the same price–is an optimal fundraising mechanism in the presence of strong asymmetries in the way bettors value the prize and the public good provided with the lottery proceeds. When participants are more homogeneous, it is optimal to offer discounts for the purchase of multiple tickets.

Suggested Citation

  • Damianov, Damian S., 2015. "Should lotteries offer discounts on multiple tickets?," Economics Letters, Elsevier, vol. 126(C), pages 84-86.
    • Handle: RePEc:eee:ecolet:v:126:y:2015:i:c:p:84-86
    DOI: 10.1016/j.econlet.2014.11.002
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    References listed on IDEAS

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    1. Fang, Hanming, 2002. "Lottery versus All-Pay Auction Models of Lobbying," Public Choice, Springer, vol. 112(3-4), pages 351-371, September.
    2. Nti, Kofi O, 1999. "Rent-Seeking with Asymmetric Valuations," Public Choice, Springer, vol. 98(3-4), pages 415-430, March.
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    4. Embrey, M.S. & Mengel, F. & Peeters, R.J.A.P., 2012. "Strategic commitment and cooperation in experimental games of strategic complements and substitutes," Research Memorandum 051, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    5. Bos, Olivier, 2011. "How lotteries outperform auctions," Economics Letters, Elsevier, vol. 110(3), pages 262-264, March.
    6. John Morgan, 2000. "Financing Public Goods by Means of Lotteries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 761-784.
    7. Maxim Engers & Brian McManus, 2007. "Charity Auctions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 953-994, August.
    8. Jacob K. Goeree & Emiel Maasland & Sander Onderstal & John L. Turner, 2005. "How (Not) to Raise Money," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 897-926, August.
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    Cited by:

    1. Damian S. Damianov & Ronald Peeters, 2018. "Prize‐Based Mechanisms For Fund‐Raising: Theory And Experiments," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1562-1584, July.
    2. Damianov, Damian S. & Peeters, Ronald, 2017. "On the disclosure of ticket sales in charitable lotteries," Economics Letters, Elsevier, vol. 150(C), pages 73-76.

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    More about this item

    Keywords

    Fundraising mechanisms; Complete information; Asymmetries; Lottery ticket discounts;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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