IDEAS home Printed from https://ideas.repec.org/p/yon/wpaper/2025rwp-239.html

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
    as

    Download full text from publisher

    File URL: http://121.254.254.220/repec/yon/wpaper/2025rwp-239.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marc Oliver Rieger & Mei Wang & Thorsten Hens, 2017. "Estimating cumulative prospect theory parameters from an international survey," Theory and Decision, Springer, vol. 82(4), pages 567-596, April.
    2. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    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 464-477, June.
    4. Charness, Gary & Yang, Chun-Lei, 2014. "Starting small toward voluntary formation of efficient large groups in public goods provision," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 119-132.
    5. Marco Fabbri & Paolo Nicola Barbieri & Maria Bigoni, 2019. "Ride Your Luck! A Field Experiment on Lottery-Based Incentives for Compliance," Management Science, INFORMS, vol. 65(9), pages 4336-4348, September.
    6. Filiz-Ozbay, Emel & Guryan, Jonathan & Hyndman, Kyle & Kearney, Melissa & Ozbay, Erkut Y., 2015. "Do lottery payments induce savings behavior? Evidence from the lab," Journal of Public Economics, Elsevier, vol. 126(C), pages 1-24.
    7. R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
    8. John Duffy & Alexander Matros, 2014. "On the Use of Fines and Lottery Prizes to Increase Voter Turnout," Economics Bulletin, AccessEcon, vol. 34(2), pages 966-975.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Víctor González‐Jiménez, 2024. "Incentive contracts when agents distort probabilities," Quantitative Economics, Econometric Society, vol. 15(3), pages 607-653, July.
    2. Ben S. Meiselman & Collin Weigel & Paul J. Ferraro & Mark Masters & Kent D. Messer & Olesya M. Savchenko & Jordan F. Suter, 2022. "Lottery Incentives and Resource Management: Evidence from the Agricultural Data Reporting Incentive Program (AgDRIP)," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 847-867, August.
    3. Fatas, Enrique & Nosenzo, Daniele & Sefton, Martin & Zizzo, Daniel John, 2021. "A self-funding reward mechanism for tax compliance," Journal of Economic Psychology, Elsevier, vol. 86(C).
    4. Ferraro Paul J & Vossler Christian A, 2010. "The Source and Significance of Confusion in Public Goods Experiments," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-42, July.
    5. Ghossoub, Mario & Zhu, Michael B., 2024. "Stackelberg equilibria with multiple policyholders," Insurance: Mathematics and Economics, Elsevier, vol. 116(C), pages 189-201.
    6. Felix Reichenbach & Martin Walther, 2023. "Financial recommendations on Reddit, stock returns and cumulative prospect theory," Digital Finance, Springer, vol. 5(2), pages 421-448, June.
    7. Boosey, Luke A., 2017. "Conditional cooperation in network public goods experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 108-116.
    8. Bryan C. McCannon & Paul Walker, 2020. "Individual Competence and Committee Decision Making: Experimental Evidence," Southern Economic Journal, John Wiley & Sons, vol. 86(4), pages 1531-1558, April.
    9. Dian Yu & Jianjun Gao & Weiping Wu & Zizhuo Wang, 2022. "Price Interpretability of Prediction Markets: A Convergence Analysis," Papers 2205.08913, arXiv.org, revised Nov 2023.
    10. Miklós Antal & Ardjan Gazheli & Jeroen C.J.M. van den Bergh, 2012. "Behavioural Foundations of Sustainability Transitions. WWWforEurope Working Paper No. 3," WIFO Studies, WIFO, number 46424.
    11. Shi, Hai-Liu & Chen, Sheng-Qun & Chen, Lei & Wang, Ying-Ming, 2021. "A neutral cross-efficiency evaluation method based on interval reference points in consideration of bounded rational behavior," European Journal of Operational Research, Elsevier, vol. 290(3), pages 1098-1110.
    12. Crystal Reeck & Karoline Gamma & Elke U. Weber, 2022. "How we decide shapes what we choose: decision modes track consumer decisions that help decarbonize electricity generation," Theory and Decision, Springer, vol. 92(3), pages 731-758, April.
    13. Scharf, Kimberley & Perroni, Carlo & Pogrebna, Ganna & Sandford, Sarah, 2014. "Are Donors Afraid of Charities' Core Costs? Scale Economies in Non-profit Provision," CEPR Discussion Papers 10179, C.E.P.R. Discussion Papers.
    14. Buckley, Edward & Croson, Rachel, 2006. "Income and wealth heterogeneity in the voluntary provision of linear public goods," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 935-955, May.
    15. Tjaša Bjedov & Simon Lapointe & Thierry Madiès & Marie Claire Villeval, 2018. "Does decentralization of decisions increase the stability of large groups?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(4), pages 681-716, December.
    16. Panagiotis Andrikopoulos & Nick Webber, 2019. "Understanding time-inconsistent heterogeneous preferences in economics and finance: a practice theory approach," Annals of Operations Research, Springer, vol. 282(1), pages 3-26, November.
    17. Matthew D. Rablen, 2023. "Loss Aversion, Risk Aversion, and the Shape of the Probability Weighting Function," Working Papers 2023013, The University of Sheffield, Department of Economics.
    18. Jürgen Huber & Laura Hueber & Daniel Kleinlercher & Thomas Stöckl, 2022. "Acceptance or rejection of welfare migration—an experimental investigation," SN Business & Economics, Springer, vol. 2(11), pages 1-28, November.
    19. Arbel, Yuval & Bar-El, Ronen & Tobol, Yossef, 2016. "Fundraising to a real-life public good – evidence from the laboratory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 27-37.
    20. Kim, Duk Gyoo, 2021. "Vaccination lottery," Economics Letters, Elsevier, vol. 208(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:yon:wpaper:2025rwp-239. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: YERI (email available below). General contact details of provider: https://edirc.repec.org/data/eryonkr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.