The transfer paradox and sunspot equilibria

Thorsten Hens · Beate Pilgrim

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Experimental Behavioral Economics Studies Nonprofit Sector and Volunteering Decision-Making and Behavioral Economics

Abstract

This paper tests the effect of a matching mechanism on donations in a controlled fieldnexperiment. We match the donations of students at the University of Zurich who, each semester, have to decide whether they wish to contribute to two Social Funds. Our results support thenhypothesis that a matching mechanism increases contributions to a public good. However, the effect depends on the extent to which the contributions are matched. Whereas a 25 percentnincrease of a donation does not increase the willingness to contribute, a 50 percent increase does have an effect. In addition, people need to be socially inclined to react to the matching mechanism. The field experiment provides some evidence suggesting that the matching mechanism crowds-out the intrinsic motivation of giving.

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References

1999A Theory of Fairness, Competition, and Cooperation 1974Subjectivity and correlation in randomized strategies 1998A Theory of Fairness, Competition and Cooperation 2000Motivation Crowding Theory: A Survey of Empirical Evidence 2000Are People Conditionally Cooperative? Evidence from a Public Goods Experiment 2000A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence 2000Motivation, Knowledge Transfer, and Organizational Forms 2000Fairness, incentives, and contractual choices

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