Bundling Public with Private Goods

We propose a simple mechanism that might improve voluntary contributions to public goods. Using a laboratory experiment, we analyze how bundling public with private goods affects individuals’ valuations of both goods. In the experiment, subjects may purchase a private and a public good either separately or in the form of a bundle. The data show superadditivity for bundles of public and private goods, i.e., the willingness to pay for the bundle exceeds the willingness to pay for the two separate goods. By contrast, we find no superadditivity in control treatments with private goods only. We discuss several behavioral concepts in line with our results, as well as implications for fundraisers and firms