Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250151 
Year of Publication: 
2021
Series/Report no.: 
Working Papers in Economics and Statistics No. 2021-29
Publisher: 
University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon), Innsbruck
Abstract: 
We present experimental evidence for decision settings where public good providers compete for endogenous donations offered by outside donors. Donors receive benefits from public good provision but cannot provide the good themselves. The performance of three competition mechanisms is examined in relation to the level of public good provision and transfers offered by donors. In addition to a contest with rewards proportional to effort to all public good providers, we study two contests with exclusion from transfers, namely a winner-takes-all and a losergets-nothing. We compare behavior in these three decision settings to the default setting of no-transfers. Results for this novel decision environment with endogenous prizes show that contributions to the public good are not significantly different in the winner-takes-all and loser-gets-nothing settings, but donor's transfers are significantly lower in winner-takes-all. Initially, the winner-takes-all and loser-gets-nothing settings lead to a significant increase in public good contributions compared to the setting where transfers are proportional to contributions for everyone; but this difference diminishes over decision rounds. All three contest with endogenous prizes generate consistent and significantly higher public good provision compared to the setting with no-transfers.
Subjects: 
Public Good
Institution
Externality
Contests
Laboratory Experiment
JEL: 
D70
H41
C92
Document Type: 
Working Paper

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