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Why Announce Leadership Contributions? An Experimental Study of the Signaling and Reciprocity Hypotheses

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Author Info

  • Potters, J.J.M.
  • Sefton, M.
  • Vesterlund, L.

    (Tilburg University, Center for Economic Research)

Abstract

Why do fundraisers announce initial contributions to their charity?Potential explanations are that these announcements cause future donors to increase their contributions, either because they want to reciprocate the generosity of earlier donors, or because the initial contributions are seen as a signal of the charity's quality.Using experimental methods we investigate these two hypotheses.When only the first donor is informed of the public good's quality, subjects not only copy the initial contribution, but the first donor also correctly anticipates this response.While this result is consistent with both the signaling and the reciprocity explanations, the latter is unlikely to be the driving force.The reason is that announcements have no effect on contribution levels when the quality of the public good is common knowledge.Thus our results provide strong support for the signaling hypothesis.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2001-100.

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Date of creation: 2001
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Handle: RePEc:dgr:kubcen:2001100

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Keywords: funds; information; public goods;

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Citations

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Cited by:
  1. Ronald J. Baker II & James M. Walker & Arlington W. Williams, 2006. "Matching Contributions and the Voluntary Provision of a Pure Public Good: Experimental Evidence," Caepr Working Papers 2006-007, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington, revised Dec 2007.
  2. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
  3. Potters, J.J.M. & Sefton, M. & Vesterlund, L., 2005. "After you - endogenous sequencing in voluntary contribution games," Open Access publications from Tilburg University urn:nbn:nl:ui:12-171671, Tilburg University.
  4. List, John A. & Rondeau, Daniel, 2003. "The impact of challenge gifts on charitable giving: an experimental investigation," Economics Letters, Elsevier, vol. 79(2), pages 153-159, May.
  5. Giovanna d’Adda, 2012. "Leadership and influence: Evidence from an artefactual field experiment on local public good provision," ECON - Working Papers 059, Department of Economics - University of Zurich.
  6. Frey, Bruno S. & Torgler, Benno, 2007. "Tax morale and conditional cooperation," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 136-159, March.
  7. d'Adda, Giovanna, 2011. "Social Status and Influence: Evidence from an Artefactual Field Experiment on Local Public Good Provision," Proceedings of the German Development Economics Conference, Berlin 2011 22, Verein für Socialpolitik, Research Committee Development Economics.
  8. Eckel, Catherine C. & Grossman, Philip J. & Johnston, Rachel M., 2005. "An experimental test of the crowding out hypothesis," Journal of Public Economics, Elsevier, vol. 89(8), pages 1543-1560, August.
  9. Bruno S. Frey & Benno Torgler, 2004. "Taxation and Conditional Taxation," Working Papers 2004/7, Institut d'Economia de Barcelona (IEB).
  10. Claude Meidinger & Marie-Claire Villeval, 2002. "Leadership in Teams: Signaling or Reciprocating ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00178474, HAL.

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