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A Model of Challenge Funds: How Funding Availability and Selection Rigor Affect Project Quality

Author

Listed:
  • Raphael Boleslavsky

    (University of Miami)

  • Bruce Carlin

    (UCLA)

  • Christopher Cotton

    (Queen's University)

Abstract

Challenge funds (CF) induce competition between grant applicants as they develop proposals to address important social problems. We develop a game-theoretic model to study how funding availability and proof of concept requirements (e.g., pilots or other forms of early-stage screening) influence investments by applicants and the ultimate success of the CF. Larger budgets and more rigorous proof of concept requirements can reduce applicant investments and lead to less effective funding initiatives. The results show how the design of a CF affects the incentives of those competing for funding, and how the most effective CF design needs to carefully consider how the NGOs or researchers applying for funding will respond to a change in incentives. Otherwise, steps taken to improve the quantity or quality of funded projects can backfire and decrease overall funding effectiveness.

Suggested Citation

  • Raphael Boleslavsky & Bruce Carlin & Christopher Cotton, 2021. "A Model of Challenge Funds: How Funding Availability and Selection Rigor Affect Project Quality," Working Paper 1470, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1470
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1470.pdf
    File Function: First version 2021
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Challenge Funds; Grants; Project Evaluation; Pilot Studies; Funding Allocation; Evidence Based Funding;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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