“Giving” in to social pressure

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2016-09-01

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© 2016 Elsevier Inc.We develop a theory of charitable giving in which donors feel social pressure from a direct solicitation. We show that equilibrium donations are concentrated around a social norm. Despite a higher level of the public good, relatively poor and/or low altruism givers fare worse under social pressure and would avoid the solicitor at a cost. Aggregate donor welfare improves to the extent that the added social motive alleviates the underprovision of the public good; however, overprovision may result. Our theory therefore predicts a light-handed regulation for charitable solicitations, which is consistent with their exemption from the popular Do Not Call list in the U.S. We further show that contrary to pure altruism, a more equal income distribution may produce more of the public good. In fundraising campaigns where a social norm is not apparent, one may emerge endogenously if donors are not too heterogeneous.

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10.1016/j.geb.2016.07.006

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Name-Correa, AJ, and H Yildirim (2016). “Giving” in to social pressure. Games and Economic Behavior, 99. pp. 99–116. 10.1016/j.geb.2016.07.006 Retrieved from https://hdl.handle.net/10161/13166.

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Yildirim

Huseyin Yildirim

Professor of Economics

Professor Yildirim joined Duke Economics in 2000 after receiving a Ph.D. from the University of Florida. He is an applied microeconomic theorist with broad interests. He has written on such varied topics as dynamic procurement auctions, charitable fundraising, committee design, and, most recently, career concerns in teamwork and tournaments. His work has appeared in top economics journals, including American Economic Review, Review of Economic Studies, Journal of Economic Theory, and RAND Journal of Economics.


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