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

Author

Listed:
  • Stephen Knowles

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

  • Maroš Servátka

    (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.

Suggested Citation

  • Stephen Knowles & Maroš Servátka, 2014. "Transaction costs, the Opportunity Cost of Time and Inertia in Charitable Giving:," Working Papers 1401, University of Otago, Department of Economics, revised Jan 2014.
    • Handle: RePEc:otg:wpaper:1401
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    File URL: http://www.otago.ac.nz/economics/news/otago078304.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    charitable giving; dictator game; transaction costs; opportunity cost of time; inertia;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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