Group Size and Conformity in Charitable Giving: Evidence from a Donation-Based Crowdfunding Platform in Japan

Abstract

A charitable donor typically imitates the majority contribution of other donors. This study examines the relationships between majority size and this so-called donor’s conformity behavior, by empirically investigating the impacts of multiple earlier donations on the donation of a subsequent donor to JapanGiving, a donation-based crowdfunding platform in Japan. This analysis is possible because the platform’s webpage displays the previous donation amounts in chronological order, thus allowing us to examine the modal amount of more recent donations. By using data on 9,989 actual donations, our dynamic panel analyses suggest that when the two most recent donations are identical, a subsequent donor is likely to match the last donation. In other words, when the last donor imitates the donation of the penultimate donor, the subsequent donor is also likely to imitate this amount. Additionally, the likelihood increases when the number of most recent continuous modal donations increases. These results support the notion that a donor’s conformity behavior is more likely to occur when a greater proportion of the other donors give a similar amount. Furthermore, the effects of continuous modal donations are strongly observed for low monetary ranges. We discuss that individuals would obtain an excuse for less cooperation due to others’ behaviors or initiating further cooperation among a large number of less cooperative others would become harder. Our findings connect economic studies of charity and social psychology studies of conformity and could help improve the effectiveness of fundraising by charities.

Keywords: Charitable giving, Conformity, Free-ride, Dynamic panel model, Crowdfunding, Fundraising management

JEL Classification: D64, H41, C99