We conduct a field experiment at a nonprofit organization’s online store to study how demand changes when consumers’ purchases generate revenue for a charitable cause. Consumers respond strongly when their purchases generate small donations by an anonymous outside group, but responses are substantially weaker when the outside donations are relatively large. Responses are also strong when the outside donation requires a personal donation which consumers generally decline. Overall, increasing the salience of financial incentives appears to dampen consumers’ responses to charitable messages. We also present evidence that the donation pledges reduce price sensitivity and have positive long-term effects on demand.
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Paper provided by NET Institute in its series Working Papers with number
08-28.
Find related papers by JEL classification: C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments D64 - Microeconomics - - Welfare Economics - - - Altruism L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Social Responsibility
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