Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace

48 Pages Posted: 28 Dec 2009 Last revised: 1 Sep 2010

See all articles by Daniel W. Elfenbein

Daniel W. Elfenbein

Washington University in St. Louis - John M. Olin Business School

Raymond J. Fisman

National Bureau of Economic Research (NBER); Boston University

Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: December 2009

Abstract

We investigate the impact of charity tie-ins on transaction probabilities and sale prices using a large database of eBay auctions. We examine "natural experiments" of precisely matched clusters of charity and non-charity auctions with identical titles, subtitles, sellers, and start prices. We find a 6 to 14 percentage point increase in sale probability and a 2 to 6 percent greater maximum bid for charity items, depending on the fraction of auction proceeds that is donated to charity. The impact on sale probability and price is most pronounced among sellers without extensive eBay histories, suggesting that consumers view charity as a signal of seller quality and a substitute for reputation. We also find that charity-tied products by all sellers are more likely to sell (and at higher prices) immediately following Hurricane Katrina, implying that consumers derive direct utility from seller charity at times when charity is particularly salient.

Suggested Citation

Elfenbein, Daniel W. and Fisman, Raymond and McManus, Brian, Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace (December 2009). NBER Working Paper No. w15614. Available at SSRN: https://ssrn.com/abstract=1528036

Daniel W. Elfenbein (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

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Campus Box 1156
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HOME PAGE: http://www.elfenbein.net

Raymond Fisman

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
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Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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