Excusing Selfishness in Charitable Giving: The Role of Risk

Exley, Christine L.

doi:10.1093/restud/rdv051

“…Without curvature, they would not care about the variance ofỹ, and this would change how they react to information. Consistent with our characterization of risk averse type-2 investors, recent experimental evidence suggests that individual donors are risk averse in the outcomes that stem from their donations (e.g., Brock et al, 2013;Exley, 2015). That is, recent experimental evidence provides a basis for assuming that individuals are risk averse in outcomes other than cash ‡ows.…”

Section: Investors and Their Preferencessupporting

confidence: 78%

Taste, Information, and Asset Prices: Implications for the Valuation of CSR

Friedman

¹

,

Heinle

²

2015

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Firms often undertake activities that do not necessarily increase cash flows (e.g., costly investments in corporate social responsibility or CSR), and some investors value these non cash activities (i.e., they have a "taste" for these activities). We develop a model to capture this phenomenon and focus on the asset-pricing implications of differences in investors' tastes for firms' activities and outputs. Our model shows that, first, investor taste differences provide a basis for investor clientele effects that are endogenously determined by the shares demanded by different types of investors. Second, because the market must clear at one price, investors' demands are influenced by all dimensions of firm output even if their preferences are only over some dimensions. Third, information releases cause trading volume, even when all investors have the same information. Fourth, investor taste provides a rationale for corporate spin-offs that help firms better target their shareholder bases. Finally, individual social responsibility can lead to corporate social responsibility when managers care about stock price because price reacts to investments in CSR activities. AbstractFirms often undertake activities that do not necessarily increase cash ‡ows (e.g., costly investments in corporate social responsibility, or CSR), and some investors value these noncash activities (i.e., they have a "taste"for these activities). We develop a model to capture this phenomenon and focus on the asset-pricing implications of di¤erences in investors'tastes for …rms' activities and outputs. Our model shows that, …rst, investor taste di¤erences provide a basis for investor clientele e¤ects that are endogenously determined by the shares demanded by di¤erent types of investors. Second, because the market must clear at one price, investors'demands are in ‡uenced by all dimensions of …rm output even if their preferences are only over some dimensions. Third, information releases cause trading volume, even when all investors have the same information. Fourth, investor taste provides a rationale for corporate spin-o¤s that help …rms better target their shareholder bases. Finally, individual social responsibility can lead to corporate social responsibility when managers care about stock price because price reacts to investments in CSR activities.

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“…See the Appendix for a proof. We do not address risk as it relates to excuses for giving behavior (Exley, 2015).…”

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confidence: 99%

Do Beliefs About Peers Matter for Donation Matching? Experiments in the Field and Laboratory

Gee

¹

,

Schreck

²

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Do Beliefs about Peers Matter for Donation Matching? Experiments in the Field and Laboratory AUGUST 2017Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. party. But field experiments find that matching does not always increase donations. This may occur because individuals believe that peer donors will exhaust the matching funds, so their donation is not pivotal to obtaining matching funds. We develop a theory of how beliefs about peers' donations affect one's own likelihood of donation. We test our theory using novel "threshold match" treatments in field and laboratory experiments. These treatments form small groups and offer a flat matching bonus if a threshold number of donations is received. One "threshold match" treatment more than doubles the donation rate in the field relative to no match. To better understand the mechanism behind this huge increase, we use a lab study to replicate the field results and further show that beliefs about peers' donations matter. Our theoretical, lab, and field results combined suggest people are more likely to donate when they believe they are more pivotal to securing matching money. Beliefs about others matter, and they should be taken into account when trying to increase donations. JEL Classification:C93, D64, H41

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“…Consider our introductory example of gender discrimination. First, people could be unaware of having a preference over gender, and 3 The experiments in Exley (2015) have a similar structure, although that paper introduces a risk/safety tradeoff, rather than a cash/goods tradeoff, and does not use a figure-8 identification. We discuss Exley (2015) in detail later in the paper.…”

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confidence: 99%

“…First, people could be unaware of having a preference over gender, and 3 The experiments in Exley (2015) have a similar structure, although that paper introduces a risk/safety tradeoff, rather than a cash/goods tradeoff, and does not use a figure-8 identification. We discuss Exley (2015) in detail later in the paper. 4 Framing effects are usually defined as choice being influenced by a normatively irrelevant attribute, where "normative irrelevance" is imposed by assumption.…”

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confidence: 99%

“…If we assume that preferences are separable in the movie type, then transitivity of underlying preferences requires that the average rate of preference along the cycle exceed 5.2 Exley (2015) on self-serving biases Exley (2015) experimentally studies "excuse-driven risk preferences," and finds that risk-preferences seem to change in a self-serving way. Subjects choose between payoffs to charity and payoffs to themselves: when the payoff to charity has some risk, then decision-makers are risk averse; but when the payoff to themselves has risk, then decision-makers become relatively risk-loving.…”

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confidence: 99%

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Implicit Preferences Inferred from Choice

Cunningham

¹

,

Quidt

²

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Implicit Preferences Inferred from ChoiceAbstract A longstanding distinction in psychology is between implicit and explicit preferences. Implicit preferences are ordinarily measured by observing non-choice data, such as response time. In this paper we introduce a method for inferring implicit preferences directly from choices. The necessary assumption is that implicit preferences toward an attribute (e.g. gender, race, sugar) have a stronger effect when the attribute is mixed with others, and so the decision becomes less "revealing" about one's preferences. We discuss reasons why preferences would have this property, advantages and disadvantages of this method relative to other measures of implicit preferences, and application to measuring implicit preferences in racial discrimination, selfcontrol, and framing effects.JEL-codes: D030, D830, J710.

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Excusing Selfishness in Charitable Giving: The Role of Risk

Cited by 272 publications

References 65 publications

Taste, Information, and Asset Prices: Implications for the Valuation of CSR

Taste, Information, and Asset Prices: Implications for the Valuation of CSR

Do Beliefs About Peers Matter for Donation Matching? Experiments in the Field and Laboratory

Implicit Preferences Inferred from Choice

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