*A Prize to Give for: An Experiment on Public Good Funding Mechanisms

24 Pages Posted: 7 Sep 2010

See all articles by Luca Corazzini

Luca Corazzini

University of Padua - Department of Economics; Bocconi University - Department of Economics

Marco Faravelli

The University of Queensland

Luca Stanca

University of Milan, Bicocca - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: 2009-08-03

Abstract

This article investigates fund-raising mechanisms based on a prize as a way to overcome free riding in the private provision of public goods. We focus on an environment characterised by income heterogeneity and incomplete information about income levels. Our analysis compares experimentally the performance of a lottery, an all-pay auction and a benchmark voluntary contribution mechanism. We find that prize-based mechanisms perform better than voluntary contribution in terms of public good provision. Contrary to the theoretical predictions, contributions are significantly higher in the lottery than in the all-pay auction, both overall and by individual income types.

Suggested Citation

Corazzini, Luca and Faravelli, Marco and Stanca, Luca, *A Prize to Give for: An Experiment on Public Good Funding Mechanisms (2009-08-03). The Economic Journal, Vol. 120, Issue 547, pp. 944-967, September 2010. Available at SSRN: https://ssrn.com/abstract=1670362 or http://dx.doi.org/10.1111/j.1468-0297.2009.02314.x

Luca Corazzini (Contact Author)

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Marco Faravelli

The University of Queensland ( email )

Australia

Luca Stanca

University of Milan, Bicocca - Department of Economics ( email )

Piazza dell'Ateneo, Nuovo I
Milan 20126
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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