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Competition among public good providers for donor rewards

Author

Listed:
  • Natalie Struwe

    (University of Innsbruck)

  • Esther Blanco

    (University of Innsbruck
    Indiana University)

  • James M. Walker

    (Indiana University
    Indiana University)

Abstract

We present experimental evidence for decision settings where public good providers compete for endogenous rewards which are donations (transfers) offered by outside donors. Donors receive benefits from public good provision but cannot provide the good themselves. The performance of three competition mechanisms is examined in relation to the level of public good provision and transfers offered by donors. In addition to a contest where transfers received by public good providers are proportional to effort, we study two contests with exclusion from transfers, namely a winner-takes-all and a loser-gets-nothing. We compare behavior in these three decision settings to the default setting of no-contest (no-transfers). Results for this novel decision environment with endogenous transfers show that donors offer transfers (contest prizes) at similar levels across contests and contributions to the public good are not significantly different in the three contests settings, but are consistently and significantly higher in all contests compared to the setting with no-transfers. Initially, the winner-takes-all setting leads to a significantly higher increase in public good contributions compared to the other two contests; but this difference diminishes across decision rounds.

Suggested Citation

  • Natalie Struwe & Esther Blanco & James M. Walker, 2024. "Competition among public good providers for donor rewards," Experimental Economics, Springer;Economic Science Association, vol. 27(1), pages 215-243, March.
    • Handle: RePEc:kap:expeco:v:27:y:2024:i:1:d:10.1007_s10683-022-09766-7
    DOI: 10.1007/s10683-022-09766-7
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    More about this item

    Keywords

    Public good; Institution; Externality; Contests; Laboratory experiment;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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