Matched Charitable Contributions: Comparative Statics and Equilibrium

Abstract

A small optimizing agent maximizes his utility by allocating his income to private consumption and to a contribution to a particular charity. The agent’s contribution may be matched, at a particular rate, by a large agent. We provide a comprehensive comparative-statics analysis of the agent’s problem, allowing for changes in the agent’s income, the agent’s conjecture about other agents’ contributions, and the match rate. A Nash equilibrium among n such agents is shown to exist if private consumption is a normal good for all agents. The equilibrium is unique if private consumption and charitable giving are normal goods for all agents.