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Excusing Selfishness in Charitable Giving: The Role of Risk

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  • Christine L. Exley

Abstract

Decisions involving charitable giving often occur under the shadow of risk. A common finding is that potential donors give less when there is greater risk that their donation will have less impact. While this behaviour could be fully rationalized by standard economic models, this article shows that an additional mechanism is relevant: the use of risk as an excuse not to give. In a laboratory study, participants evaluate risky payoffs for themselves and risky payoffs for a charity. When their decisions do not involve tradeoffs between money for themselves and the charity, they respond very similarly to self risk and charity risk. By contrast, when their decisions force tradeoffs between money for themselves and the charity, participants act more averse to charity risk and less averse to self risk. These altered responses to risk bias participants towards choosing payoffs for themselves more often, consistent with excuse-driven responses to risk. Additional results support the existence of excuse-driven types.

Suggested Citation

  • Christine L. Exley, 2016. "Excusing Selfishness in Charitable Giving: The Role of Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 587-628.
  • Handle: RePEc:oup:restud:v:83:y:2016:i:2:p:587-628.
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    File URL: http://hdl.handle.net/10.1093/restud/rdv051
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