Rent Extraction and Prosocial Behavior

36 Pages Posted: 14 Oct 2019

See all articles by Tobias Cagala

Tobias Cagala

Deutsche Bundesbank

Ulrich Glogowsky

Ludwig Maximilian University of Munich (LMU)

Johannes Rincke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Veronika Grimm

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics

Amanda Tuset-Cueva

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Date Written: 2019

Abstract

We present controlled experimental evidence on how rent extraction by an administrator affects giving to non-profit associations. Holding the price of giving constant, we compare contributions between two conditions: a rent extraction condition, in which an administrator can expropriate a part of the contributions and a control condition without rent extraction. We find that rent extraction strongly reduces average contributions. Studying the channels through which this effect operates, we demonstrate that rent extraction has situational spillovers, suggesting that it undermines the contributors' general preference for giving. In contrast, we do not find evidence for negative reciprocity towards the administrator.

Keywords: rent extraction, donations, prosocial behavior

JEL Classification: D020, D030, H410

Suggested Citation

Cagala, Tobias and Glogowsky, Ulrich and Rincke, Johannes and Grimm, Veronika and Tuset-Cueva, Amanda, Rent Extraction and Prosocial Behavior (2019). CESifo Working Paper No. 7808, Available at SSRN: https://ssrn.com/abstract=3467941

Tobias Cagala (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Ulrich Glogowsky

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Johannes Rincke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, DE Bavaria 91054
Germany

Veronika Grimm

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics ( email )

Nuremburg
Germany

Amanda Tuset-Cueva

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Fachbereich Rechtswissenschaft
Schillerstr. 1
Erlangen, DE 91054
Germany

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