Strategic information revelation in fundraising

Abstract

We consider a model of voluntary contributions for a public project with random number of potential contributors. The fundraiser, who observes this number, has to decide whether to reveal or suppress the information before contributions are given. The fundraiser’s objective is to collect maximal contributions. We show that whether the public project is convex or non-convex can be the key to the fundraiser’s announcement decision. In the convex case, this number is always revealed. In the non-convex case the number may not be revealed at all or sometimes revealed only when it is in an intermediate range. In the presence of multiple equilibria, total contributions increase with the extent of concealment.  2002 Elsevier Science B.V. All rights reserved.