Doctoral Dissertation Research in Economics: An Experimental Study of Social Effects in Fundraising

Georgia State University Research Foundation, Inc., Atlanta GA

Investigators

Abstract

This project uses laboratory economic experiments to study strategic and social forces in charitable contributions. The research is modeled on a scenario in which a group of friends each has a child in an activity like the Girl Scouts of the USA. Periodically, each friend must solicit donations from the others for her child's organization. Altruism will influence giving, but social and strategic factors will also be important. A father of a Boy Scout may buy Girl Scout cookies from a colleague hoping that colleague will buy Boy Scout popcorn when that fundraiser comes around. This is trust and reciprocity or strategic coordination. An individual who does not engage in fundraising may still give because she wishes to be viewed as generous. This experiment is based on a "public goods game:" subjects are given tokens that they may keep or share with the group by contributing to a common investment (the public good) that benefits everyone. Subjects' contributions are revealed to each other. One subject each round is the "stakeholder," receiving a high return from the public good. This person represents the individual who fundraises in the real-world scenario. Subjects observe each others' actions and can punish each other by withholding contributions. The project also examines the situation where one or more group member will never be stakeholder (is designated as the "bachelor"). Neoclassical economic theory predicts that free-ridership will cause public goods to be underprovided. However, the world provides many examples where people do make significant contributions to public goods. Over the decades, an impressive body of work has developed to explain some of this. This experiment adds to that literature, and is novel in that altruism, self-interested multi-period behavior, and social pressure interact in a controlled setting. The results of the experiment will shed light on how these forces work together, and how they can be used in situations where we wish to encourage altruism and cooperation outside the lab. These insights will expand our understanding of choice in social settings. The broader impact of this research is the insight provided into some commonly-used fundraising techniques harnessing social and strategic forces. The results also have implications for public policy. Many public policy problems are problems of externalities: problems where goods are public, so there is an incentive for people to free ride. In many situations, policy seeks to reduce free-ridership and increase pro-social behavior. An improved understanding of the forces at play in public goods scenarios where contributions are high can provide practical insights. This experiment in particular has applicability to small-scale local and public goods, such as parks, recreation facilities, and local environmental resources