A Coordination Game Model of Charitable Giving and Seed Money Effect
ISER Discussion Paper No. 736
31 Pages Posted: 21 May 2009 Last revised: 1 Jun 2011
Date Written: May 26, 2011
If potential donors for a charity project possess the warm-glow properties in their preferences, we can represent their behavior with a coordination game. Accordingly, we construct a simultaneous incomplete information game model of charitable giving based on a simple global coordination game. We demonstrate that merely by the effect of seed money to shift the threshold requirement of the donations for project success downwards, the proportion of donors and the total amount of donations strictly and continuously increase with the amount of seed money. This result is partially compatible with the field experimental evidence in List and Lucking-Reiley [List, J. A., Lucking-Reiley, D., 2002. The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign. Journal of Political Economy 110 (1), 215-233].
Keywords: charitable fund-raising, global game, leadership giving, philanthropy
JEL Classification: C72, D82, H41, L31
Suggested Citation: Suggested Citation