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Good-Citizen Lottery

Author

Listed:
  • Duk Gyoo Kim

    (Yonsei University)

Abstract

This paper examines the Good-Citizen Lottery, a budget-balanced institutional mechanism designed to collectively minimize public bads by using penalties from violators to fund a reward for one randomly-selected prosocial agent. Contrary to standard voluntary contribution models where cooperation decays in large groups, our game-theoretic model predicts the asymptotic stability of good-citizen behavior. This is driven by the budget-neutral nature of the lottery: as the group size grows, the decreased probability of winning the lottery is offset by the endogenously increasing prize pool (funded by more violators). Experimental evidence is consistent with this theoretical prediction: the proportion of good behavior is robust and weakly increases with group size. Finally, we show that this institutional success is further enhanced by a behavioral channel: individuals who subjectively overestimate small winning probabilities find the uncertain reward relatively more appealing, sustaining compliance levels above the risk-neutral benchmark.

Suggested Citation

  • Duk Gyoo Kim, 2025. "Good-Citizen Lottery," Working papers 2025rwp-239, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2025rwp-239
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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