Journal Article

Funding Public Goods with Lotteries: Experimental Evidence

John Morgan and Martin Sefton

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 67, issue 4, pages 785-810
Published in print October 2000 | ISSN: 0034-6527
Published online October 2000 | e-ISSN: 1467-937X | DOI:
Funding Public Goods with Lotteries: Experimental Evidence

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Why do individuals participate in charitable gambling activities? We conduct a laboratory investigation of a model that predicts risk-neutral expected utility maximizers will participate in lotteries when they recognize that lotteries are being used to finance public goods. As predicted by the model, we find that public goods provision is higher when financed by lottery proceeds than when financed by voluntary contributions. We also find support for other comparative static predictions of the model. In particular we find that ticket purchases vary with the size of the fixed prize and with the return from the public good: lotteries with large prizes are more effective, and ticket purchases drop dramatically when the public good is not valued by subjects.

Journal Article.  0 words. 

Subjects: Economics

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