Adding Exchange to Charity: A Reference Price Explanation
Tilburg University - Center and Faculty of Economics and Business Administration
Catholic University of Leuven (KUL) - School for Mass Communication Research
KU Leuven - Faculty of Business and Economics (FBE); BI Norwegian Business School
Charities often request donations while offering of a near-worthless token, like a key chain, in exchange. Little research has examined whether such 'exchange' requests are met with higher compliance rates than merely asking people to donate. Our studies suggest that in mere donation settings people may have difficulties to estimate a socially acceptable donation amount and therefore prefer opportunities that provide them with an anchor price. The value of a material good in a donation setting can play this anchoring role and signal a reference price. To the extent that the suggested reference price is low enough, exchange requests lead to more compliance than mere donation requests. In addition, our results indicate that, when accompanied by specified amounts, mere donation requests result in even better compliance rates than exchange requests.
Number of Pages in PDF File: 26
Keywords: Fundraising, donation behavior, exchange, reference price, anchorworking papers series
Date posted: October 10, 2005
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