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Priming the charitable pump: An experimental investigation of two-stage raffles

  • Sebastian J. Goerg

    ()

    (Department of Economics, Florida State University)

  • John Lightle

    ()

    (Department of Economics, Florida State University)

  • Dmitry Ryvkin

    ()

    (Department of Economics, Florida State University)

We study experimentally two-stage self-financing raffles, a novel class of charity fund-raising mechanisms in which participants can buy tickets in two stages. The proceeds of the first stage are used as the seed money for the second stage. The mechanisms differ by what happens to the tickets purchased in the first stage. In the complete draw down two-stage raffle, the first stage tickets are eliminated from the active pool of tickets, while in the no draw down raffle they remain in the active pool. We find that both two-stage raffles initially perform better than the standard one-stage 50-50 raffle. Over time, the aggregate contribution level in the complete draw down raffle declines and approaches that of the one-stage raffle, while in the no draw down raffle contributions are stable and remain higher than in the other two mechanisms. In both two-stage raffles we observe a positive correlation between the proceeds of the first stage and the number of tickets bought in the second stage. Our results show promise for multi-stage self-financing fund-raising mechanisms, although not necessarily driven by unboundedly rational motives.

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File URL: ftp://econpapers.fsu.edu/RePEc/fsu/wpaper/wp2013_05_01.pdf
File Function: First version, 2013-05
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Paper provided by Department of Economics, Florida State University in its series Working Papers with number wp2013_05_01.

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Length: 30 pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:fsu:wpaper:wp2013_05_01
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  1. John Morgan & Martin Sefton, 2000. "Funding Public Goods with Lotteries: Experimental Evidence," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 785-810.
  2. Luca Corazzini & Marco Faravelli & Luca Stanca, 2007. "A Prize to Give for: An Experiment on Public Good Funding Mechanisms," Working Papers 108, University of Milano-Bicocca, Department of Economics, revised 2007.
  3. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  4. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  5. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2009. "Individual risk attitudes: Measurement, determinants and behavioral consequences," Munich Reprints in Economics 20049, University of Munich, Department of Economics.
  6. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  7. Henrik Orzen, 2005. "Fundraising through Competition: Evidence from the Lab," Discussion Papers 2005-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  8. Varian, Hal R., 1994. "Sequential contributions to public goods," Journal of Public Economics, Elsevier, vol. 53(2), pages 165-186, February.
  9. John List, 2008. "Introduction to field experiments in economics with applications to the economics of charity," Experimental Economics, Springer, vol. 11(3), pages 203-212, September.
  10. Franke, Jörg & Leininger, Wolfgang, 2013. "On the Efficient Provision of Public Goods by Means of Lotteries," Ruhr Economic Papers 399, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  11. Donald J. Dale, 2004. "Charitable Lottery Structure and Fund Raising: Theory and Evidence," Experimental Economics, Springer, vol. 7(3), pages 217-234, October.
  12. David Lucking-Reiley & John List, 2002. "The effects of seed money and refunds on charitable giving: Experimental evidence from a university capital campaign," Natural Field Experiments 00301, The Field Experiments Website.
  13. Andreas Lange & Craig Landry & John List & Michael Price & Nicholas Rupp, 2006. "Toward an understanding of the economics of charity: Evidence from a field experiment," Natural Field Experiments 00292, The Field Experiments Website.
  14. John Morgan, 2000. "Financing Public Goods by Means of Lotteries," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 761-784.
  15. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
  16. repec:feb:artefa:0105 is not listed on IDEAS
  17. Lange, Andreas, 2006. "Providing public goods in two steps," Economics Letters, Elsevier, vol. 91(2), pages 173-178, May.
  18. repec:pit:wpaper:377 is not listed on IDEAS
  19. Douglas D. Davis & Laura Razzolini & Robert Reilly & Bart J. Wilson, 2003. "Raising Revenues for Charity: Auctions versus Lotteries," Working Papers 0301, VCU School of Business, Department of Economics.
  20. R. Isaac & Svetlana Pevnitskaya & Timothy Salmon, 2010. "Do preferences for charitable giving help auctioneers?," Experimental Economics, Springer, vol. 13(1), pages 14-44, March.
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