The Effects of Transactions Costs and Social Distance: Evidence from a Field Experiment

B.E. Journal of Economic Analysis & Policy (Contributions), 14(1), 271-96, July 2013

26 Pages Posted: 28 Jan 2014

See all articles by Jonathan Meer

Jonathan Meer

Texas A&M University - Department of Economics

Oren Rigbi

Ben-Gurion University of the Negev

Date Written: July 1, 2013

Abstract

We use data from a field experiment at Kiva, the online microfinance platform, to examine the role of transactions costs and social distance in decision-making. Requests for loans are either written in English or another language, and our treatment consists of posting requests in the latter category with or without translation. We find evidence that relatively small transactions costs have a large effect on the share of funding coming from speakers of languages other than that in which the request was written. Social distance plays a smaller role in funding decisions.

Keywords: social distance, translation, transactions costs, microfinance, charitable giving

JEL Classification: D23, G21

Suggested Citation

Meer, Jonathan and Rigbi, Oren, The Effects of Transactions Costs and Social Distance: Evidence from a Field Experiment (July 1, 2013). B.E. Journal of Economic Analysis & Policy (Contributions), 14(1), 271-96, July 2013. Available at SSRN: https://ssrn.com/abstract=2386542

Jonathan Meer

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Oren Rigbi (Contact Author)

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

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