Trying and Failing: Biases in Donor Aversion to Rejection

31 Pages Posted: 12 Jun 2020 Last revised: 24 May 2021

See all articles by Kaitlin Daniels

Kaitlin Daniels

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

León Valdés

University of Pittsburgh - Katz Graduate School of Business

Date Written: April 18, 2021

Abstract

Non-profit organizations (NPOs) play a critical role in advancing the UN Sustainable Development Goals, directing resources from donors to aid recipients. To achieve this, they often rely on donations of physical goods, which can not only further the mission of the NPO, but also give new life to used goods destined for the landfill. However, not all donations are wanted or needed - the NPO may be space constrained or the donation may be of poor quality. Accepting unwanted donations imposes non-trivial operational costs on the NPO or its downstream partners. Nonetheless, NPOs often hesitate to reject unwanted items, fearing negative repercussions for future donations. To better understand these repercussions, we study how donors respond to rejection using a controlled experiment. Subjects repeatedly choose whether to complete a real-effort task that generates a donation, which is rejected with a fixed probability whose value is unknown to them. We measure subjects' donation decisions and beliefs about the probability that their donations are accepted. We compare these measures against a for-profit experimental condition wherein the subject, not an NPO, receives the payment generated by the real-effort task. Our results identify a mechanism by which rejections affect donations: via a reduction in donors' beliefs about future success. Moreover, we identify a novel instance of self-serving bias: when high effort is required to make a donation, subjects' beliefs respond significantly more negatively to rejection in the donation condition than in the for-profit condition. We propose ways in which NPOs can alleviate this bias.

Keywords: donation, non-profit operations, humanitarian logistics, behavioral operations, self-serving bias

Suggested Citation

Daniels, Kaitlin and Valdés, León, Trying and Failing: Biases in Donor Aversion to Rejection (April 18, 2021). Available at SSRN: https://ssrn.com/abstract=3604315 or http://dx.doi.org/10.2139/ssrn.3604315

Kaitlin Daniels (Contact Author)

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

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

León Valdés

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

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