Discussion Paper No. 331
July 7, 2022
Charitable Giving by the Poor
A Field Experiment in Kyrgyzstan
Authors:
Adena, Maja (WZB Berlin)Hakimov, Rustamdjan (University of Lausanne and WZB Berlin)
Huck, Steffen (WZB Berlin and UCL)
Abstract:
In a large-scale natural field experiment, we partnered with a micro-lending company in Kyrgyzstan that asked over 180,000 of its clients for donations to social projects as a form of corporate philanthropy. In a 2×2 design, we explored two main (pre-registered) hypotheses about giving by the poor. First, based on a conjecture that poor are more price sensitive than the rich and in contrast to previous studies, we hypothesize that matching incentives induce crowding in of out-of-pocket donations. Second, we hypothesize that our population cares about their proximity to the charitable project. We find evidence in favor of the former hypothesis but not the latter.
Previous studies of charitable giving focus on middle- or high-income earners in Western countries, neglecting the poor, although the lowest income groups are often shown to contribute substantial shares of their income to charitable causes. Our results challenge the evidence in the extant literature but are in line with our theoretical model. The implications for fundraising managers are that the optimal design of fundraising campaigns crucially depends on the targeted groups, and that donation matching is successful in stimulating participation in poorer populations.
Keywords:
charitable giving; field experiments; matching donationsJEL-Classification:
C93; D64; D12Download:
Open PDF fileDiscussion Paper No. 328
May 12, 2022
A Field Experiment on Threshold Matching of Donations
Authors:
Adena, Maja (WZB Berlin)Huck, Steffen (WZB Berlin and UCL)
Abstract:
We study a form of threshold matching in fundraising where donations above a certain threshold are topped up with a fixed amount. We show theoretically that threshold matching can induce crowding in if appropriately personalized. In a field experiment, we explore how thresholds should be chosen depending on past donations. The optimal choice of thresholds is rather bold, approximately 75% above past donations. Additionally, we explore how thresholds should be set for new donors as a function of their personal characteristics and demonstrate the benefits of personalization as opposed to setting a general threshold that applies to all recipients of a fundraising call.
Keywords:
charitable giving; field experiments; matching donations; personalizationJEL-Classification:
C93; D64; D12Download:
Open PDF fileDiscussion Paper No. 326
May 5, 2022
Voluntary ‘Donations’ versus Reward-Oriented ‘Contributions’: Two Experiments on Framing in Funding Mechanisms
Authors:
Adena, Maja (WZB Berlin)Huck, Steffen (WZB Berlin and UCL)
Abstract:
In an artefactual field experiment, we implemented a crowdfunding campaign for an institute's summer party and compared donation and contribution framings. We found that the use of the word 'donation' generated higher revenue than the use of 'contribution'. While the individuals receiving the donation framing gave substantially larger amounts, those receiving the contribution framing responded more strongly to reward thresholds and suggestions. An additional survey experiment on MTurk indicated that the term 'donation' triggers more positive emotional responses and that emotions are highly correlated with giving. It appears that making a donation is perceived as a more voluntary act and is thus more successful at generating warm glow than making a contribution. We surmise that this extends to other funding mechanisms.
Keywords:
crowdfunding; field experiment; framingJEL-Classification:
C93; D64; D12Download:
Open PDF fileDiscussion Paper No. 319
February 18, 2022
COVID-19 and Pro-Sociality: How Do Donors Respond to Local Pandemic Severity, Increased Salience, and Media Coverage?
Authors:
Adena, Maja (WZB Berlin)Harke, Julian (WZB Berlin)
Abstract:
Has the COVID-19 pandemic affected pro-sociality among individuals? After the onset of the pandemic, many charitable appeals were updated to include a reference to COVID-19. Did donors increase their giving in response to such changes? In order to answer these questions, we conducted a real-donation online experiment with more than 4,200 participants from 149 local areas in England and over 21 weeks. First, we varied the fundraising appeal to either include or exclude a reference to COVID-19. We found that including the reference to COVID-19 in the appeal increased donations. Second, in a natural experiment-like approach, we studied how the relative local severity of the pandemic and media coverage about local COVID-19 severity affected giving in our experiment. We found that both higher local severity and more related articles increased giving of participants in the respective areas. This holds for different specifications, including specifications with location fixed effects, time fixed effects, a broad set of individual characteristics to account for a potentially changing composition of the sample over time and to account for health- and work-related experiences with and expectations regarding the pandemic. While negative experiences with COVID-19 correlate negatively with giving, both approaches led us to conclude that the pure effect of increased salience of the pandemic on pro-sociality is positive.
Despite the shift in public attention toward the domestic fight against the pandemic and away from developing countries’ challenges, we found that preferences did not shift toward giving more to a national project and less to developing countries.
Keywords:
COVID-19; charitable giving; online experiments; natural experimentsJEL-Classification:
C93; D64; D12Download:
Open PDF fileDiscussion Paper No. 276
February 5, 2021
Do Robo-Advisors Make Us Better Investors?
Author:
Back, Camila (LMU Munich)
Morana, Stefan (Saarland University)
Spann, Martin (LMU Munich)
Abstract:
Investors increasingly can obtain assistance from “robo-advisors,” artificial intelligence–enabled digitalized service agents imbued with anthropomorphic design elements that can communicate using natural language. The present article considers the impact of anthropomorphized robo-advisors on investment decisions, with a focus on their ability to mitigate investors’ behavioral biases. We study the well-documented disposition effect, which reflects investors’ greater propensity to realize past gains than past losses. In two induced-value laboratory experiments, the availability of a robo-advisor reduces (i.e., mitigates) investors’ disposition effect. This relationship is mediated by two simultaneous (indirect) effects: the extent of requests for the robo-advisor’s investment advice and perceptions of its socialness. These findings resonate with cognitive dissonance theory, which predicts that assigning responsibility to the advisor helps investors resolve a sense of discomfort that may arise after a financial loss. Anthropomorphic design elements alone are not sufficient to reduce the disposition effect, but they decrease investors’ propensity to seek advice, which offsets the positive (indirect) effect of perceived socialness. These results have implications for the ongoing automation of advisory services, as well as for improving decision making, and suggest some further research directions.
Keywords:
robo-advisors; artificial intelligence; advice; anthropomorphism; disposition effect
JEL-Classification:
D91; D83; D84; G11; G41
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Discussion Paper No. 271
January 19, 2021
Paying for Open Access
Author:
Stich, Lucas (LMU Munich)
Spann, Martin (LMU Munich)
Schmidt, Klaus M. (LMU Munich)
Abstract:
Open access (OA) publishing upends the traditional business model in scientific publishing by requiring authors instead of readers to pay for the publishing-related costs. In this paper, we aim to elicit the willingness to pay (WTP) of authors for open access publishing. We conduct two separate field studies with different methodological approaches in different scientific disciplines (economics and medicine). First, a choice-based conjoint (CBC) analysis measures stated preferences of 243 economists in Germany, Austria, and Switzerland regarding their valuations of open access publishing in the “Top 5” economics journals. Second, a field experiment at four different open access medical journals elicits authors’ self-determined (“Pay-What-You-Want”) payments for open access publications. The results provide a plausible range of authors’ valuations, given that the first study rather provides an upper bound and the second study a lower bound of authors’ willingness to pay for open access publishing.
Keywords:
open access; willingness to pay; choice-based conjoint analysis; pay-what-you-want; field experiment
JEL-Classification:
D12; M31; L11; L82
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Discussion Paper No. 248
June 21, 2020
Dynamic Pricing in a Digitized World
Author:
Spann, Martin (LMU Munich)
Skiera, Bernd (Goethe University Frankfurt)
Abstract:
Digital technologies favor the use of dynamic pricing, i.e., prices that vary unannounced for a product that basically remains unchanged. However, different forms of dynamic pricing are often mixed in the public discussion, which makes a meaningful analysis of the advantages and disadvantages of dynamic pricing difficult. The aim of this paper is to present the economic foundations of dynamic pricing as well as to discuss and to classify its design options. In addition, the paper assesses dynamic pricing from a buyer and seller perspective. Finally, the paper discusses implications for business research.
Keywords:
Dynamic pricing; price differentiation; price discrimination; digitization
JEL-Classification:
M30; D40; D10
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Discussion Paper No. 216
December 13, 2019
Intertemporal Preferences and the Adoption Decision for Bluetooth Speakers
Author:
Guhl, Daniel (HU Berlin)
Klapper, Daniel (HU Berlin)
Abstract:
The adoption decision for durable goods is intertemporal by definition. However, estimating utility and discount functions from revealed preference data using dynamic discrete choice models is difficult because of an inherent identification problem. To overcome this issue, we use stated preference data. Specifically, we employ the experimental design of Dubé, Hitsch, and Jindal (2014), where future prices are known and that elicits intertemporal adoption decisions for Bluetooth speakers in a discrete choice framework. We estimate several models of discounting (e.g., static, myopic, geometric, and quasi-hyperbolic) and find considerably lower discount factors than typical market interest rates would suggest. The values are also smaller compared to respondents’ matching-based discount factors, even though the correlation is positive and significant. Furthermore, there are substantial differences in discounting across respondents (i.e., heterogeneity in time-preferences) and lastly, there is no strong empirical evidence for quasi-hyperbolic discounting. Thus, the standard economic model seems to be appropriate for the data at hand.
Keywords:
intertemporal preferences; dynamic discrete choice models; durable goods adoption
JEL-Classification:
C35; D9; D12; M31
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Discussion Paper No. 193
October 23, 2019
The Existence and Persistence of the Pay-per-use Bias in Car Sharing Services
Author:
Dowling, Katharina (LMU Munich)
Manchanda, Puneet (University of Michigan)
Spann, Martin (LMU Munich)
Abstract:
A key benefit of using car sharing services (relative to car ownership) is that they are more cost effective. Car sharing firms offer a menu of pricing plans to make this happen. The two most common plans are flat-rate and pay-per-use pricing. However, little is known about how consumers choose among these pricing plans. In this study, we analyze consumers’ choices between pay-per-use and flat-rate pricing using data from a car sharing provider in a large European city. We show that over 40% of customers make nonoptimal pricing plan choices (i.e., they do not choose the cost minimizing plan). In contrast to previous research, we find a prevalent and time-persistent pay-per-use bias; i.e., we find little evidence that consumers “learn”. We propose three potential explanations for the existence and persistence of this bias. First, we suggest that customers underestimate their usage. Second, we propose that customers have a preference for flexibility, leading them to pay more. Finally, we show that the physical context, such as weather, increases the likelihood of a pay-per-use bias. We suggest that the pay-per-use bias may be the prevalent tariff choice bias in the Sharing Economy.
Keywords:
sharing economy; car sharing; pricing; pay-per-use bias; flat-rate bias
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Discussion Paper No. 154
May 2, 2019
An Experimental Analysis of Overconfidence in Tariff Choice
Authors:
Dowling, Katharina (LMU Munich)
Spann, Martin (LMU Munich)
Stich, Lucas (LMU Munich)
Abstract:
Digitalization has changed existing business models and enabled new ones. This development has been accompanied by the emergence of new pricing options and the possibility of applying established pricing models in new domains. Today, consumers can, for example, pay for accessing a product instead of buying it. Within such sharing services, consumers can usually choose between a flat-rate and a pay-per-use option. Prior work demonstrated that consumers' tariff choices are often systematically biased. Overconfidence was identified as one of the key drivers. Yet, prior research is non-experimental and focused on the so-called flat-rate bias. By contrast, we examine the effects of overconfidence on tariff choice experimentally. We show that overconfident consumers overestimate their ability to predict their future usage, which leads them to underestimate their actual usage, and eventually leads them to choose a pay-per-use (vs. a flat-rate) option more frequently. We discuss theoretical and managerial implications.
Keywords:
overconfidence; tariff choice; pay-per-use; flat-rate; experiment
JEL-Classification: