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A Coordination Game Model of Charitable Giving and Seed Money Effect

Authors


  • I would like to thank an associate editor, two anonymous referees, Masaki Aoyagi, Atsushi Kajii, and Shigehiro Serizawa for their helpful suggestions. I am also grateful to Kazuhiko Hashimoto, Daisuke Oyama, Shuhei Morimoto, Stephen Morris, Tadashi Sekiguchi and Hiroshi Uno, as well as other participants at the 2009 Econometric Society Far East and South Asia Meeting, the 2009 Japanese Economic Association Spring Meeting, and the 2008 Kyoto Game Theory Workshop for their helpful comments and discussions. The financial support from the Japan Society for the Promotion of Science via the Research Fellowship for Young Scientist is gratefully acknowledged.

Abstract

If potential donors for a charity project possess the warm-glow properties in their preferences, we can represent their behavior with a coordination game. Accordingly, we construct a simultaneous incomplete information game model of charitable giving based on a simple global coordination game. We demonstrate that merely by the effect of seed money to shift the threshold requirement of the donations for project success downwards, the proportion of donors and the total amount of donations strictly and continuously increase with the amount of seed money. This result is partially compatible with the field experimental evidence in List and Lucking-Reiley (2002).

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