Private providers of public goods, such as charities, invariably enlist fund-raisers to organize and collect contributions. Common in charitable fund-raising is seed money, either from a government grant or from a group of ‘‘leadership givers,’ ’ that launches the fund drive and generates additional gifts. This paper provides a theoretical basis for fund-raisers and seeds to charity. The primary assumption is that there is a range of increasing returns at low levels of provision of the public good. It is shown that fund-raisers have a natural and important role, and that sometimes only a small amount of seed money can grow into a substantial charity. I.

This paper investigates cooperative play in prisoner’s dilemma games by designing an experiment to evaluate the ability of two leading theories of observed cooperation: reputation building and altruism. We analyze both one-shot and finitely repeated games to gauge the importance of these theories. We conclude that neither altruism nor reputation building alone can explain our observations. The reputation model is inconsistent with play in both one-shots and finitely repeated games while the model with altruism is unable to explain observed play in the finitely repeated

This paper reports on a series of laboratory experiments designed to evaluate a mechanism for the voluntary provision of public good. The public good is provided if the total contributions meet or exceed a threshold and all contributions are returned if the public good is not provided. The members of the group all know the threshold, the incomes, and the valuations assigned the public good by all other members. The results support the prediction that this mechanism will yield Pareto eficient outcomes and suggest that economic agents adopt strategies which form equilibria satisfying certain rejnenients to the Nash equilibrium.

We consider the dynamic private provision of funds to projects that generate public benefits. Participants have complete information about the environment, but imperfect information about individual actions: each period they observe only the aggregate contribution. Each player may contribute any amount in any period before the contributing horizon is reached. All Nash equilibrium outcomes are characterized. In many cases they are all also perfect Bayesian equilibrium outcomes. If the horizon is long, if the players ’ preferences are similar, and if they are patient or the period length is short, perfect Bayesian equilibria exist that essentially complete the project. In some of them the completion time shrinks to zero with the period length—efficiency is achieved in the limit. 1.

This paper examines a puzzling inconsistency between the theoretical prediction of private provisions to public goods and actual fundraising behavior. While fundraisers often choose to announce past contributions, economic theory predicts that contributions will be largest when donors are uninformed of the contributions made by others. This paper suggests that an announcement strategy may be optimal because it helps reveal the charity’s quality. It is shown that when there is imperfect information about the value of the public good and contributors can purchase information regarding its quality, then there exist equilibria in which an announcement strategy is optimal. Interestingly, in equilibrium a high-quality charity receives contributions that exceed those that would result had the quality of the charity been common knowledge. Hence, an announcement strategy not only helps worthwhile organizations reveal their type, but it also helps the fundraiser reduce the free-rider problem.

Entrepreneurs who start new firms may choose not-for-profit status as a means of committing to soft incentives. Such incentives protect donors, volunteers, consumers and employees from ex post expropriation of profits by the entrepreneur. We derive conditions under which completely selfinterested entrepreneurs opt for not-for-profit status, despite the fact that this status limits their ability to enjoy the profits of their enterprises. We also show that even in the absence of tax advantages, unrestricted donations would flow to non-profits rather than for-profit firms because donations have more significant influence on the decisions of the non-profits. 1 Earlier work on non-profit firms includes Arrow (1963) and Nelson and Krashinsky (1973).

Decentralized anonymity infrastructures are still not in wide use today. While there are technical barriers to a secure robust design, our lack of understanding of the incentives to participate in such systems remains a major roadblock. Here we explore some reasons why anonymity systems are particularly hard to deploy, enumerate the incentives to participate either as senders or also as nodes, and build a general model to describe the effects of these incentives. We then describe and justify some simplifying assumptions to make the model manageable, and compare optimal strategies for participants based on a variety of scenarios.

Consider a situation where a society has to elect an official who provides a public service for the citizens. Candidates differ in their competence and every potential candidate has private information about his cost to perform the task of the elected official. We develop a new citizen candidate model with a unique equilibrium to analyze citizens' candidature decisions. Under some weak additional...

Economists have long observed that crowding out of government grants to private charities is incomplete. The accepted belief is that givers treat the grants as imperfect substitutes for private giving. We theoretically and empirically investigate a second reason: the strategic response of a charity will be to reduce fund-raising efforts after receiving a grant. Employing panel data from arts and social service organizations, we find that government grants cause significant reductions in fund-raising. This adds a new dimension to the policy discussions—analysts should account for the behavioral responses of the charity, as well as the donors, to government grants. (JEL H00, H32, H50) When the government makes a grant to a private charitable organization, does it displace private giving? This is one of the fundamental policy questions in public finance, and much theoretical and empirical research has been devoted to understanding the relationship between private donations and government funding. The hypothesis underlying these studies is that givers, who are also taxpayers, will use their taxfinanced donations as a substitute for their voluntary donations, thus reducing the net effectiveness of the grants. This has been called the crowding-out hypothesis. 1 Recently, new research has begun to examine the role that fund-raising plays on the solicitation and receipt of donations by studying the theoretical structure of fund-raising and the marginal effectiveness of fund-raising expenditures. 2 There is a

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