On the efficient provision of public goods by means of biased lotteries: The two player case

- Biased lotteries can be used to achieve the efficient outcome in public good provision games.
- We characterize the minimal prize sum for the lottery necessary to implement the first-best.
- The minimal prize sum behaves non-monotonically as a function of consumers' heterogeneity.

In this paper we analyze how biased lotteries can be used to overcome the free-riding problem in voluntary public good provision. We characterize the optimal combinations of bias and lottery prize and the conditions that guarantee efficient public good provision in equilibrium.