Do Donors Care About the Price of Giving? A Review of the Evidence, with Some Theory to Organize It

Jade Wong and Andreas Ortman ()
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Jade Wong: Centre for Social Impact, Australian School of Business, the University of New South Wales
Andreas Ortman: School of Economics, Australian School of Business, the University of New South Wales

No 2013-22, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We study how donors decide which charity to give to. To this end, we construct a theoretical model that clarifies the conditions in which the stand-alone benefit from giving, price of giving, and cost of information acquisition inform giving decisions. The model shows that giving decisions are affected by a price-cost trade-off – a condition where donors care about the price of giving because they want their donations to maximise charitable output, but dislike searching for the price of giving because it is costly. The literature is then reviewed to test the explanatory power of the theoretical model: it seems to support the conjecture that a price-cost trade-off informs donors’ giving decisions.

Keywords: donations; efficiency; price of giving; price-cost trade-off (search for similar items in EconPapers)
JEL-codes: D03 L31 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2013-09
New Economics Papers: this item is included in nep-cbe and nep-nps
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:swe:wpaper:2013-22

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