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

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  • 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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Cited by:
  1. repec:hal:cesptp:halshs-00178474 is not listed on IDEAS
  2. Bénabou, Roland & Tirole, Jean, 2004. "Incentives and Prosocial Behaviour," CEPR Discussion Papers 4633, C.E.P.R. Discussion Papers.
  3. Frey, Bruno S. & Torgler, Benno, 2007. "Tax morale and conditional cooperation," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 136-159, March.
  4. Czap, Hans J. & Czap, Natalia V., 2011. "Donating-selling tradeoffs and the influence of leaders in the environmental goods game," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(6), pages 743-752.
  5. Baker II, Ronald J. & Walker, James M. & Williams, Arlington W., 2009. "Matching contributions and the voluntary provision of a pure public good: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 122-134, May.
  6. 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.
  7. 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.
  8. 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.
  9. Bruno S. Frey & Benno Torgler, 2004. "Taxation and Conditional Taxation," Working Papers 2004/7, Institut d'Economia de Barcelona (IEB).
  10. 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.
  11. Krishnamurthy, Sandeep & Tripathi, Arvind K., 2009. "Monetary donations to an open source software platform," Research Policy, Elsevier, vol. 38(2), pages 404-414, March.
  12. 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.

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