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

  • Stephen Knowles


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

  • MaroÅ¡ Servátka


    (Department of Economics and Finance, University of Canterbury, New Zealand)

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.

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Paper provided by University of Otago, Department of Economics in its series Working Papers with number 1401.

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Length: 47 pages
Date of creation: Jan 2014
Date of revision: Jan 2014
Handle: RePEc:otg:wpaper:1401
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