Local or global welfare? An experiment on giving common means to charity.

2024-04-29

2024-05-06

Results: Payoff, Donation amount

Hypothesis 1: Participants are donating money
The experiment assumes that donations are made in all experimental groups. The donations of the baseline experiment serve as the indicator for the average donation preferences in the participant pool.

Hypothesis 2a:
In the socialized cost treatment with a multiplier of one, it is assumed that participants on average donate the same amount as in the baseline experiment. This is based on the assumption that the decrease in individual cost of giving is balanced by a factor ß representing the prosocial preferences of individuals for the welfare of their group members. The claim is that individuals can adapt consistently to a prosocial dilemma by adjusting their donation preferences to the welfare of the group with a factor of ß=1. If ß>1, a group bias can be suspected. If ß<1, negligence for the socialized cost of the group can be suspected.

Hypothesis 2b:
In the socialized cost treatment with a multiplier of four, participants are assumed to reduce their donation amount significantly. The same logic applies as in Hypothesis 2a. By introducing a multiplier of four, participants have the same cost of giving as in the baseline experiment. It is assumed, that the welfare parameter ß will be equal to one. This would suggest a decrease in donations by three-fourths compared to the baseline experiment to account for the welfare opportunity costs of a donation. Additionally, an increased wealth effect might be found. This effect might increase donation preferences. Hence, Interpretations for the parameter ß might differ. Overall, it is assumed that even with identical costs of giving donations will be reduced significantly.

Demographics: gender, age, field of study
Social Preferences: donation history

Donation history: participants are asked if they have donated in the last 6 months

The experiment is hosted by the economic experimental lab of the University of Hamburg. Participants are invited to three experimental sessions. In the sessions, they are randomized into three experiment groups. In the experimental group, they are grouped again into groups of four. Hence one experimental session hosts ten experimental subgroups. The subgroups are provided with a general introduction, in which they are familiarized with the charity. Then they are provided with a separate explanation that belongs to the experimental group. They quizzed on a separate page to test the comprehension of the experimental group task. Afterward, they take part in five consecutive rounds. Participants are informed they are rewarded based on one of the five rounds, which will be randomly generated at the end of the experiment.

The experimental groups are divided into one baseline group and two treatment groups. The baseline group is designed to investigate the donation preferences for the individual cost of giving. The treatments are designed to test for donation preferences in case of socialized cost of giving and socialized opportunity cost of giving. Each participant is part of a group of four and is endowed with 100 points at the beginning of each round. In the baseline group participants are asked to fill in the amount of points they want to keep and the amount of points they want to give to the charity. After every group member decides on the amounts, the payoffs and the decisions of the other group members are shown to each group member. In the first treatment, the participants are asked to fill in the amount of points they want to give to a group pool and a charity pool. They are informed that the group pool aggregates the points of each group member and distributes them equally while the charity pool gives points to the charity. The individual cost of giving is thereby reduced to one-fourth while the other three-fourths are socialized. The following procedure is then identical to the baseline experiment. The second treatment introduces a multiplier for the group pool which is set at four. Hence, the group has major opportunity costs, but the individual cost of giving is identical to the baseline experiment.

Randomization into groups and treatments is done within the experiment by the computer at the beginning of the experiment.

Individuals are randomized into treatments. Within the treatments they are distributed into groups of four.

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120 participants

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