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Fundraising through Competition: Evidence from the Lab

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  • Henrik Orzen

    () (University of Nottingham)

Abstract

This paper investigates mechanisms for the private provision of a public good which utilize competition to incentivize contributions. Theory predicts that “all-pay” competition is particularly effective for fundraising. Within this class of mechanisms different types of lotteries and all-pay auctions are analyzed and ranked. Four all-pay competition mechanisms are then examined in a laboratory experiment vis-à-vis a voluntary contribution mechanism (VCM). All four outperform the VCM and towards the end of the experiment fully efficient outcomes are attained in the “lowest common denominator” scheme, which is particularly accommodating for people who have a preference for cooperating conditionally on others doing their bit.

Suggested Citation

  • Henrik Orzen, 2008. "Fundraising through Competition: Evidence from the Lab," Discussion Papers 2008-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  • Handle: RePEc:cdx:dpaper:2008-11
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    File URL: http://www.nottingham.ac.uk/cedex/documents/papers/2008-11.pdf
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    More about this item

    Keywords

    Public Goods; Provision Mechanisms; Experiments; Contests;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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