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The crowding-out effect of cause-marketing on private donations

Author

Listed:
  • Sinha, Nishita
  • Palma, Marco A.
  • Woodward, Richard T.

Abstract

We extend the standard altruism and warm-glow models of charitable giving to incorporate cause marketing, where firms pledge to donate a fixed portion of sales proceeds for each unit of consumer goods sold. Using a general utility framework, we show that under cause-marketing, complete crowding-out is realizable for both pure and impure altruists. We conduct an artefactual field experiment where participants decide between allocating their endowment toward buying donation-tied tokens and directly donating to an individualized charity. We test for cause-marketing charitable giving motivations by varying the source of third-party donations between an exogenous lump-sum transfer and an endogenous transfer that indirectly accrues via private consumption. Our results suggest that on average, cause-marketing contributions arising from private token consumption lead to as much warm-glow utility as direct contributions to the charity.

Suggested Citation

  • Sinha, Nishita & Palma, Marco A. & Woodward, Richard T., 2026. "The crowding-out effect of cause-marketing on private donations," Journal of Economic Behavior & Organization, Elsevier, vol. 245(C).
  • Handle: RePEc:eee:jeborg:v:245:y:2026:i:c:s0167268126000752
    DOI: 10.1016/j.jebo.2026.107489
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    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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