An Experimental Test of the Crowding Out Hypothesis: The Nature of Beneficent Behavior

Posted: 28 Mar 2005

See all articles by Gary E. Bolton

Gary E. Bolton

Pennsylvania State University - Department of Supply Chain & Information Systems

Elena Katok

University of Texas at Dallas

Abstract

An extensively studied model of public goods provision implies that government donations to charity crowd out private donations dollar-for-dollar. Field studies fail to verify this result. Several analysts argue that the problem lies with the specification of donor preferences. We report on a new experiment that provides a direct test of donor preferences free of the strategic factors that can confound tests in the field, and in other experimental settings. Our method involves the dictator game. We find extensive but incomplete crowding out - direct evidence that donor preferences are incorrectly specified by the standard model.

Keywords: Public goods, crowding out, experiment

JEL Classification: C72, C91, H30, H41

Suggested Citation

Bolton, Gary Eugene and Katok, Elena, An Experimental Test of the Crowding Out Hypothesis: The Nature of Beneficent Behavior. Available at SSRN: https://ssrn.com/abstract=673515

Gary Eugene Bolton (Contact Author)

Pennsylvania State University - Department of Supply Chain & Information Systems ( email )

Dept. of Supply Chain & Information Systems
University Park, PA 16802-3306
United States
814-865-0611 (Phone)
814-863-2381 (Fax)

Elena Katok

University of Texas at Dallas ( email )

Jindal School of Management
800 W. Campbell Dr.
Richardson, TX 75080
United States

HOME PAGE: http://www.utdallas.edu/~ekatok/

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