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

  • Faravelli, Marco
  • Stanca, Luca

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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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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