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Transaction Costs, the Opportunity Cost of Time and Inertia in Charitable Giving

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  • Stephen Knowles

    ()
    (Department of Economics, University of Otago, New Zealand)

  • Maros Servatka

    ()
    (Department of Economics and Finance, University of Canterbury, New Zealand)

Abstract

We conduct a laboratory experiment to analyze the effect transactions costs and inertia have on charitable giving. We conjecture that transaction costs will have a greater effect on donations if the solicitation is received when the opportunity cost of time is high. Inertia could become a factor if people intend to give, but postpone making the payment until they have more time, and having postponed making the donation once, keep doing so. We find evidence of a transaction cost effect, with the size of this effect depending on the opportunity cost of time, but no statistically significant inertia effect.

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File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_1401.pdf
File Function: First version, 2014
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Bibliographic Info

Paper provided by University of Otago, Department of Economics in its series Working Papers with number 1401.

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Length: 47 pages
Date of creation: Jan 2014
Date of revision: Jan 2014
Handle: RePEc:otg:wpaper:1401

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Keywords: charitable giving; dictator game; transaction costs; opportunity cost of time; inertia;

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