Charity as a Signal of Trustworthiness

19 Pages Posted: 14 Nov 2010  

Sebastian Fehrler

IZA; University of Konstanz - Faculty of Economics and Statistics; University of Zurich, Center for Comparative and International Studies (CIS)

Abstract

Being perceived as trustworthy comes with substantial economic benefits in many situations. Making other people think you are a trustworthy person may, therefore, be an important motive for charity and other forms of prosocial behavior, provided these activities work as signals of trustworthiness. This paper shows that donating money to an NGO substantially raises the other players' beliefs about the donorsメ trustworthiness in a simple trust game. Consequently, donors receive higher transfers. The magnitude of these benefits is substantial.

Keywords: charity, signaling, trust, trustworthiness

JEL Classification: C72, C92, H41

Suggested Citation

Fehrler, Sebastian, Charity as a Signal of Trustworthiness. IZA Discussion Paper No. 5299. Available at SSRN: https://ssrn.com/abstract=1708745

Sebastian Fehrler (Contact Author)

University of Zurich, Center for Comparative and International Studies (CIS) ( email )

Affolternstrasse 56
8050 Zurich
Switzerland

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Konstanz - Faculty of Economics and Statistics ( email )

Universitaetsstr. 10
78457 Konstanz
Germany

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