The Hidden Benefits of Control: Evidence from a Natural Field Experiment

Craig Landry, Andreas Lange, John List, Michael Price and Nicholas Rupp

No 17473, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: An important dialogue between theorists and experimentalists over the past few decades has raised the study of the interaction of psychological and economic incentives from academic curiosity to a bona fide academic field. One recent area of study within this genre that has sparked interest and debate revolves around the "hidden costs" of conditional incentives. This study overlays randomization on a naturally-occurring environment in a series of temporally-linked field experiments to advance our understanding of the economics of charity and test if such "costs" exist in the field. This approach permits us to examine why people initially give to charities, and what factors keep them committed to the cause. Several key findings emerge. First, there are hidden benefits of conditional incentives that would have gone undetected had we maintained a static theory and an experimental design that focused on short run substitution effects rather than dynamic interactions. Second, we can reject the pure altruism model of giving. Third, we find that public good provision is maximized in both the short and long run by using conditional, rather than unconditional, incentives.

JEL-codes: C93 D03 H41 Q5 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-exp and nep-mic
Note: EEE PE
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Citations: View citations in EconPapers (11)

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Working Paper: The Hidden Benefits of Control: Evidence from a Natural Field Experiment (2011)
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