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

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Abstract

We conduct a laboratory experiment to study whether giving people more time to donate to charity reduces donations. People may intend to donate, but because of the transaction costs of doing so, postpone making the payment until they are less busy, and having postponed making the donation once, keep postponing. 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. We find evidence of a transaction cost reducing donations, with the size of this effect depending on the opportunity cost of time, but no statistically significant evidence that giving people more time to donate increases procrastination and thus reduces donations.

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  • Stephen Knowles & Maroš Servátka, 2015. "Transaction Costs, the Opportunity Cost of Time and Procrastination in Charitable Giving," Working Papers in Economics 15/01, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:15/01
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    File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/1501.pdf
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    1. repec:taf:jdevst:v:54:y:2018:i:6:p:1082-1094 is not listed on IDEAS
    2. Knowles, Stephen & Servátka, Maroš & Sullivan, Trudy & Genç, Murat, 2017. "Deadlines, Procrastination, and Forgetting in Charitable Tasks: A Field Experiment," MPRA Paper 83694, University Library of Munich, Germany.
    3. Knowles, Stephen & Servátka, Maroš & Sullivan, Trudy, 2016. "Deadlines, Procrastination, and Inattention in Charitable Tasks: A Field Experiment," MPRA Paper 69621, University Library of Munich, Germany.
    4. Stephen Knowles & Maroš Servátka & Trudy Sullivan, 2014. "Deadlines, Procrastination, and Inattention in Charitable Giving: A Field Experiment," Working Papers 1501, University of Otago, Department of Economics, revised Mar 2014.
    5. Jeremy Clark & Arlene Garces-Ozanne & Stephen Knowles, 2016. "Dire Straits v The Cure: Emphasising the Problem or the Solution in Charitable Fundraising for International Development," Working Papers 1608, University of Otago, Department of Economics, revised Oct 2016.
    6. Damgaard, Mette Trier & Gravert, Christina, 2017. "Now or never! The effect of deadlines on charitable giving: Evidence from two natural field experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 78-87.

    More about this item

    Keywords

    charitable giving; dictator game; transaction costs; opportunity cost of time; procrastination; inattention;

    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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