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  • Review of Economic Studies

Excusing Selfishness in Charitable Giving: The Role of Risk

By: Christine L. Exley
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Abstract

Decisions involving charitable giving often occur under the shadow of risk. A common finding is that potential donors give less when there is greater risk that their donation will have less impact. While this behavior could be fully rationalized by standard economic models, this paper shows that an additional mechanism is relevant: the use of risk as an excuse not to give. In a laboratory study, participants evaluate risky payoffs for themselves and risky payoffs for a charity. When their decisions do not involve tradeoffs between money for themselves and the charity, they respond very similarly to self risk and charity risk. By contrast, when their decisions force tradeoffs between money for themselves and the charity, participants act more averse to charity risk and less averse to self risk. These altered responses to risk bias participants towards choosing payoffs for themselves more often, consistent with excuse-driven responses to risk. Additional results support the existence of excuse-driven types.

Keywords

Charitable Giving; Prosocial Behavior; Altruism; Risk Preferences; Risk and Uncertainty; Philanthropy and Charitable Giving; Behavior

Citation

Exley, Christine L. "Excusing Selfishness in Charitable Giving: The Role of Risk." Review of Economic Studies 83, no. 2 (April 2016): 587–628.
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About The Author

Christine L. Exley

Negotiation, Organizations & Markets
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  • Beliefs about Gender Differences in Social Preferences By: Christine L Exley, Oliver P. Hauser, Molly Moore and John-Henry Pezzuto
  • Negotiating for Equal Pay: The U.S. Women’s National Soccer Team (A) and (B) By: John Beshears and Christine Exley
  • The Role of Beliefs in Driving Gender Discrimination By: Katherine B. Coffman, Christine L. Exley and Muriel Niederle
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