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Revealing the Preferences of Social Financiers

Author

Listed:
  • Christoph Starke

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Steffen Burchhardt

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

Abstract

Financiers of social entrepreneurs are typically characterized as having some form of prosocial or CSR related objective. While in some studies such objectives have been formulated on an analytically inconvenient level, other contributions are limited only to charity finance. In this paper we identify Fehr and Schmidt’s inequality aversion as an analytically tractable and most basic motivation of social financiers in general. Specifically, we show that the financiers’ decision structures and their observable behavior coincide with the experimental findings of Fehr and Schmidt (1999). Moreover, we derive behavioral implications for social entrepreneurs. Paradoxically, given that financiers do not prefer a self-consumption of the social service, they contribute more if the entrepreneur provides them nevertheless.

Suggested Citation

  • Christoph Starke & Steffen Burchhardt, 2014. "Revealing the Preferences of Social Financiers," FEMM Working Papers 140002, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:140002
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    File URL: http://www.fww.ovgu.de/fww_media/femm/femm_2014/2014_02.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
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    4. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February.
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    More about this item

    Keywords

    inequality aversion; social entrepreneurship; financier; public good; social service;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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