Mixed signals: Charity reporting when donations signal generosity and income

Anat Bracha, Lise Vesterlund*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

False inference may be drawn in asymmetric information environments where the type space is multi-dimensional and the analysis is restricted to only one of those dimensions. We demonstrate this by studying donation-visibility in a charitable-giving environment. Past studies show that donation-visibility increases giving and argue that this is consistent with donations signaling generosity or income and thereby improving donors’ status. However, this explanation relies on status being one-dimensional, acquired from only one attribute: generosity or income. The response may differ when instead status is multi-dimensional, depending on both attributes. Donors who prefer to be perceived as poor-and-generous rather than rich-and-stingy may give less when donations are visible. Using an experiment we examine the effect of donation-visibility when donations can signal multiple attributes. Revealing concerns for both income- and generosity-status, we find, in contrast to the one-attribute setting, that donation-visibility does not increase giving when donations signal both attributes.

Original languageAmerican English
Pages (from-to)24-42
Number of pages19
JournalGames and Economic Behavior
Volume104
DOIs
StatePublished - 1 Jul 2017
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2017 Elsevier Inc.

Keywords

  • Charitable donations
  • Donation visibility
  • Signaling in a multi-dimensional type space
  • Status

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