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Fundraising through Competition: Evidence from the Lab

  • Henrik Orzen

    ()

    (University of Nottingham)

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.

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File URL: http://www.nottingham.ac.uk/cedex/documents/papers/2008-11.pdf
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Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2008-11.

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Date of creation: Oct 2008
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Handle: RePEc:not:notcdx:2008-11
Contact details of provider: Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/

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  5. Marco Faravelli, 2006. "The Important Thing Is not (Always) Winning but Taking Part: Funding Public Goods with Contests," Working Papers 102, University of Milano-Bicocca, Department of Economics, revised Nov 2006.
  6. Rondeau, Daniel & Poe, Gregory L. & Schulze, William D., 2005. "VCM or PPM? A comparison of the performance of two voluntary public goods mechanisms," Journal of Public Economics, Elsevier, vol. 89(8), pages 1581-1592, August.
  7. Andreoni, James & Petrie, Ragan, 2004. "Public goods experiments without confidentiality: a glimpse into fund-raising," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1605-1623, July.
  8. Morgan, John & Sefton, Martin, 2000. "Funding Public Goods with Lotteries: Experimental Evidence," Review of Economic Studies, Wiley Blackwell, vol. 67(4), pages 785-810, October.
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  16. Alston, Richard M. & Nowell, Clifford, 1996. "Implementing the voluntary contribution game: A field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 31(3), pages 357-368, December.
  17. Arthur J.H.C. Schram & Sander Onderstal, 2009. "Bidding To Give: An Experimental Comparison Of Auctions For Charity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 431-457, 05.
  18. Jacob K. Goeree & Emiel Maasland & Sander Onderstal & John L. Turner, 2005. "How (Not) to Raise Money," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 897-926, August.
  19. Keser, Claudia & van Winden, Frans, 2000. " Conditional Cooperation and Voluntary Contributions to Public Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 23-39, March.
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  21. 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.
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