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Single versus multiple-prize all-pay auctions to finance public goods: An experimental analysis

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  • Faravelli, Marco
  • Stanca, Luca

Abstract

This paper presents an experimental comparison of single and multiple-prize all-pay auctions as fundraising mechanisms to finance public goods. We consider a setting characterized by heterogenous incomes and incomplete information, where single and multiple-prize incentive mechanisms are predicted to raise the same overall contribution, but different contributions by income level. We find that overall, for a given total prize sum, a single large prize generates higher contributions to the public good than three smaller prizes. As predicted by the theory, a single prize provides a more effective incentive for high-income individuals. However, contrary to the theoretical predictions, multiple prizes do not provide a more effective incentive for low-income individuals.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 81 (2012)
Issue (Month): 2 ()
Pages: 677-688

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:677-688

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Incentive mechanisms; Multiple prizes; All-pay auctions; Public goods; Laboratory experiments;

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References

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Citations

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Cited by:
  1. HHironori Otsubo, 2012. "Contests with Incumbency Advantages: An Experiment Investigation of the Effect of Limits on Spending Behavior and Outcome," Jena Economic Research Papers 2012-020, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  2. Marco Faravelli & Luca Stanca, 2013. "Economic Incentives and Social Preferences: Causal Evidence of Non-Separability," Working Papers 250, University of Milano-Bicocca, Department of Economics, revised Jul 2013.
  3. Hironori Otsubo, 2013. "Do campaign spending limits diminish competition? An experiment," Economics Bulletin, AccessEcon, vol. 33(3), pages 2223-2234.
  4. Martin Kolmar & Dana Sisak, 2014. "(In)efficient public-goods provision through contests," Social Choice and Welfare, Springer, vol. 43(1), pages 239-259, June.

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