Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field

Bailey Norwood () and Jayson Lusk

The B.E. Journal of Economic Analysis & Policy, 2005, vol. 5, issue 2, 1-26

Abstract: Eliciting actual donations toward a public good has been proposed as a means of estimating a lower bound to individuals' compensating surplus, and can be accomplished using mail/phone surveys or field experiments. This study shows that when warm-glow is present, the elicitation instrument decreases the transaction costs of donating. This presents an obstacle to using the donation mechanism. As a remedy, we propose the use of a multi-donation mechanism where subjects can direct their donation to alternative public goods. Results from a field experiment confirm this instrument-induced bias can be large, suggesting field experiment practitioners should seriously consider how their experimental procedures may alter economic behavior.

Date: 2005
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Citations: View citations in EconPapers (2)

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Working Paper: Instrument-induced bias in donation mechanisms: Evidence from the field (2006)
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DOI: 10.2202/1538-0645.1413

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