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Using raffles to fund public goods: Lessons from a field experiment

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  • Carpenter, Jeffrey
  • Matthews, Peter Hans

Abstract

Despite a long tradition of using lotteries, raffles and similar mechanisms to fund public goods, there has been little systematic study of the design features of these mechanisms and how the resulting incentives affect the level of provision. Partnering with a charity that provides public goods locally, we conducted a field experiment in which participants were randomly assigned to one of four raffle treatments to examine the effectiveness of alternative incentive schemes designed to encourage either participation or “volume.” Contrary to theory which anticipates that gains can be made mostly on volume, our results indicate that significant revenue gains are available on both margins. Indeed, the large opportunity cost of using the standard linear raffle (in which the price per chance to win is fixed) that we find suggests the importance of mechanism design when considering the voluntary provision of public goods.

Suggested Citation

  • Carpenter, Jeffrey & Matthews, Peter Hans, 2017. "Using raffles to fund public goods: Lessons from a field experiment," Journal of Public Economics, Elsevier, vol. 150(C), pages 30-38.
  • Handle: RePEc:eee:pubeco:v:150:y:2017:i:c:p:30-38
    DOI: 10.1016/j.jpubeco.2017.04.005
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    2. Carpenter, Jeffrey, 2021. "The shape of warm glow: Field experimental evidence from a fundraiser," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 555-574.
    3. Duffy, John & Matros, Alexander, 2021. "All-pay auctions versus lotteries as provisional fixed-prize fundraising mechanisms: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 434-464.
    4. Charles Ayoubi & Boris Thurm, 2023. "Knowledge diffusion and morality: Why do we freely share valuable information with Strangers?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 75-99, January.
    5. Giuseppe Attanasi & Barbara Buljat Raymond & Agnès Festré & Andrea Guido, 2023. "Augmented Reality Technology as a Tool for Promoting Pro-environmental Behavior and Attitudes," GREDEG Working Papers 2023-15, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    6. Alt, Marius & Gallier, Carlo, 2022. "Incentives and intertemporal behavioral spillovers: A two-period experiment on charitable giving," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 959-972.
    7. Foster, Joshua & Haley, M. Ryan, 2022. "Charity auctions as assets: Theory and simulations of fundraising risk management in mean-variance space," Socio-Economic Planning Sciences, Elsevier, vol. 83(C).
    8. Alt, Marius & Gallier, Carlo, 2021. "Incentives and intertemporal behavioral spillovers: A two-period experiment on charitable giving," ZEW Discussion Papers 21-010, ZEW - Leibniz Centre for European Economic Research.
    9. Abhishek Bhati & Ruth K. Hansen, 2020. "A literature review of experimental studies in fundraising," Journal of Behavioral Public Administration, Center for Experimental and Behavioral Public Administration, vol. 3(1).
    10. Paan Jindapon & Zhe Yang, 2020. "Free riders and the optimal prize in public‐good funding lotteries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1289-1312, September.
    11. Holzer, Jorge & McConnell, Kenneth, 2023. "Extraction rights allocation with liquidity constraints," Resource and Energy Economics, Elsevier, vol. 71(C).
    12. Jeffrey Carpenter & Damian S. Damianov & Peter Hans Matthews, 2022. "Auctions For Charity: The Curse Of The Familiar," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 1109-1135, August.

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    More about this item

    Keywords

    Public good; Fundraising; Incentives; Philanthropy; Raffle; Tullock contest; Field experiment;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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