Seeds to succeed?. Sequential giving to public projects

Anat Bracha; Michael Menietti; Lise Vesterlund

doi:10.1016/j.jpubeco.2010.10.007

Seeds to succeed?. Sequential giving to public projects

Anat Bracha^*, Michael Menietti, Lise Vesterlund

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

32 Scopus citations

Abstract

The public phase of a capital campaign is typically launched with the announcement of a large seed donation. Andreoni (1998) argues that such a fundraising strategy may be particularly effective when funds are being raised for projects that have fixed production costs. The reason is that when there are fixed costs of production simultaneous giving may result in both positive and zero provision equilibria. Thus absent announcements donors may get stuck in an equilibrium that fails to provide a desirable public project. Andreoni (1998) demonstrates that such inferior outcomes can be eliminated when the fundraiser initially secures a sufficiently large seed donation. We investigate this model experimentally to determine whether announcements of seed money eliminate the inefficiencies that may result under fixed costs and simultaneous provision. To assess the strength of the theory we examine the effect of announcements in both the presence and absence of fixed costs. Our findings are supportive of the theory for sufficiently high fixed costs.

Original language	English
Pages (from-to)	416-427
Number of pages	12
Journal	Journal of Public Economics
Volume	95
Issue number	5-6
DOIs	https://doi.org/10.1016/j.jpubeco.2010.10.007
State	Published - Jun 2011
Externally published	Yes

Bibliographical note

Funding Information:
We thank the National Science Foundation , the University of Pittsburgh , and the Mellon Foundation for financial support. Bracha thanks the University of Pittsburgh for its hospitality. For helpful comments we thank Marco Castillo and Ragan Petrie as well as participants at the 2009 conference, “Current State of Philanthropy” (Middlebury College), the 2009 International Economic Science Association conference (George Mason University), the 2009 conference, “Individual Decision-Making: A Behavioral Approach” (Tel Aviv University), and the Stanford Institute for Theoretical Economics Summer 2009 Workshop on Experimental Economics. We thank Leeat Yariv for proposing the title.

Keywords

Charitable giving
Coordination
Fundraising
Public goods
Seed money
Sequential giving

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10.1016/j.jpubeco.2010.10.007

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Seeds to succeed?. Sequential giving to public projects

Abstract

Bibliographical note

Keywords

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