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«IZA DP No. 6388 PAPER Experimental Evidence of Self-Image Concerns as Motivation for Giving Mirco Tonin DISCUSSION Michael Vlassopoulos February 2012 ...»

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SERIES

IZA DP No. 6388

PAPER

Experimental Evidence of Self-Image Concerns as

Motivation for Giving

Mirco Tonin

DISCUSSION

Michael Vlassopoulos

February 2012

Forschungsinstitut

zur Zukunft der Arbeit

Institute for the Study

of Labor

Experimental Evidence of Self-Image

Concerns as Motivation for Giving

Mirco Tonin

University of Southampton,

Central European University and IZA

Michael Vlassopoulos

University of Southampton Discussion Paper No. 6388 February 2012 IZA P.O. Box 7240 53072 Bonn Germany Phone: +49-228-3894-0 Fax: +49-228-3894-180 E-mail: iza@iza.org Any opinions expressed here are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but the institute itself takes no institutional policy positions.

The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public.

IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion.

Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

IZA Discussion Paper No. 6388 February 2012

ABSTRACT

Experimental Evidence of Self-Image Concerns as Motivation for Giving* We conduct an experiment in which subjects make a series of decisions of allocating an endowment of £10 between themselves and a passive recipient that is either a charity or the experimenter. When making these decisions subjects are informed that one of them will be chosen randomly at the end to determine payoffs. After all decisions have been made and it has been revealed which decision will determine payoffs we offer subjects an opportunity to opt out from their initial decision and receive £10 instead. We find that around one third of subjects choose to opt out. The fact that a subject decides to revise a decision to give and chooses instead to exit and keep the whole amount – an option that was available when she made the first decision and was not exercised – indicates that giving in the first instance was not motivated solely by altruism toward the recipient. We argue that opting out indicates that giving is also motivated by self-image concerns.

JEL Classification: C91, D03, D64 Keywords: dictator game, charitable giving, opting-out, self-image

Corresponding author:

Mirco Tonin School of Social Sciences University of Southampton Southampton SO17 1BJ United Kingdom E-mail: m.tonin@soton.ac.uk * This work was supported by the Economic and Social Research Council [grant number RES-061-25and by the British Academy through a Small Research Grant.

1 Introduction

This paper provides evidence of self-image concerns as motivation behind charitable giving. Psychologists have long recognized that maintenance of a perception of one’s self as a kind and helpful person is an important determinant of prosocial behavior. The main idea is that people draw inferences about their prosocial disposition from their actions (Baumeister, 1998; Bem, 1972); for instance, when a charity solicits a donation then making a contribution signals to the donor positive personality traits. More recently, self-image has also been identified as an important motivator of prosocial behavior in the economics literature (Benabou and Tirole, 2006; Bodner and Prelec, 2003; Grossman, 2010; Murnighan et al., 2001). We contribute to this strand of the literature by providing empirical support for the importance of self-image considerations in the context of a modified dictator game.

In particular, subjects in our experiment made a series of decisions of allocating an endowment of £10 between themselves and a passive recipient that was either a charity or the experimenter.

When making these decisions subjects were informed that one of them would be chosen randomly at the end to determine payoffs. When all decisions were made and it was revealed which decision would determine payoffs we offered subjects an opportunity to exit the game and receive the £10 instead. This option was not pre-announced so subjects were unaware of the possibility of revision when making the allocation decisions. We found that around one third of those who had given something in the decision that was implemented chose to opt out.

The fact that a subject decides to revise a decision to give and chooses instead to exit and keep the whole amount - an option that was available when she made the first decision and was not exercised - indicates that giving in the first instance was not motivated solely by concerns about final payoffs but also by audience effects. The role that audience effects play in shaping prosocial behavior and how they interact with monetary incentives has recently received considerable attention both theoretically (Benabou and Tirole, 2006; Ellingsen and Johannesson, 2008, 2011; Andreoni and Bernheim, 2009), and empirically in the lab and the field (Ariely et al., 2009;





Grossman, 2010; Lacetera and Macis, 2010; DellaVigna et al., 2011). Since in our experiment decisions are anonymous, and in two of the decisions the recipient is a charity who will remain unaware of the donor’s identity or of the fact that there was an experiment being conducted, leaves us with the only candidate audience being the person herself.1 How does a concern for self-image explain exiting behavior in our setting? There are two possible mechanisms through which this could take place. First, recall that subjects in our experiment were offered three chances to prove In principle, it is possible that subjects may be concerned about how the experimenter will judge their decision, however, this concern should be muted here as the experimenter cannot link decisions to specific subjects. Moreover, if subjects are concerned with the experimenters’ judgement of their decision, we would expect less opting out when the experimenters are the recipients. Instead, as we will show in section 3, the opposite is true.

to themselves that they are altruistic before being given the option to opt out. A subject that, for instance, shared an amount with the recipient during the course of the experiment has upheld the self-image of being a caring type. Now, when given the opportunity to opt out, some subjects may feel that they have already signaled their generosity in their earlier donation decisions, even if these decisions were not executed, and may therefore decide to opt out and receive the full £10.

The point is that getting £10 by opting out of a previous donation is different from keeping £10 for oneself in the original allocation decision, because in the former case the subject has shown herself her good intentions, while in the latter this is not the case. An additional mechanism explaining opting out is that when deciding how to share the £10, the subject faced the monetary cost of this decision only with a probability of one third. On the other hand, the benefit of self-signaling may be experienced regardless of implementation. At the opting out stage, the monetary costs of adhering to the previous decision are certain, as opting out applies to the specific decision that has been selected for implementation. This increase in costs can tilt the cost-benefit analysis for some subjects in the direction of opting out. All in all, opting out can be explained through a combination of a reduced benefit of self-signaling due to satiation and an increase in its costs due to the removal of the uncertainty surrounding implementation.

Our experimental design draws on a recent literature that studies exiting behavior in dictator games. This literature was launched with the paper by Dana et al. (2006) who gave dictators the opportunity for a costly exit and found that about a third of the subjects were willing to sacrifice a dollar in order that the recipient never finds out that a dictator game was played. By contrast, in a slight variation of this experiment in which the recipients would never find out that a dictator game was played the authors found that almost none of the dictators exercised the option to exit.

Broberg et al. (2007) followed up on the study by Dana et al. (2006) by estimating the distribution of exit reservation prices in a dictator game and found that the mean exiting reservation price to be about 80% of the dictator’s endowment. These results indicate that standard models of social preferences where dictators care about the payoff of recipients or dislike unfair outcomes (e.g. Fehr and Schmidt, 1999) cannot fully explain giving in the dictator game. Instead, dictators may have some concern about not meeting the expectation of the recipient and, therefore, if they can avoid having to let someone down they would do it even at a cost. Notice, however, that this interpretation of exiting behavior is open to debate in light of the evidence in Ellingsen et al. (2010) who find no correlation between dictators’ giving and the beliefs of the recipients about how much they would receive, when those beliefs had been communicated to the dictator before the decision was made.

Differently from the above studies in which the exiting option is presented to subjects after they have made the sharing decision, Lazear et al. (2012) perform experiments in which subjects are offered the option of either playing the dictator game or receiving a fixed payment and subjectrecipients remaining ignorant of the sharing possibility. They found that more than half of subjects take the exit option.2 In our experimental design aversion to disappointing dictator recipients cannot explain opting out behavior, as either the recipient is never aware (charity) or is always aware (experimenter) of the game being played. This feature of our design differentiates it from previous studies where the choice to exit has implications for the recipient’s awareness. Moreover, the fact that the choice to opt out concerns a sharing decision that has already been taken makes it implausible that exiting is explained by a desire to avoid being in a sharing environment, an explanation for exiting that has been proposed in the papers where opting out takes place before the actual sharing decision. We claim that exiting behavior in our setting is consistent with giving motivated by self-image concerns The structure of the rest of the paper is as follows: the next section describes the procedures, experimental design, and sample selection, while section 3 presents the results. The last section offers a discussion and some concluding remarks.

–  –  –

2.1 Procedures We conducted 13 experimental sessions in the fall of 2009 at the University of Southampton, involving a total of 251 students of diverse academic backgrounds, with the exclusion of economics and psychology. We invited an equal number of male and female subjects in each session. The number of participants in each session ranged between 15 and 25. We ran the sessions in large classrooms and asked subjects to take isolated seats in order to guarantee their privacy. At the beginning of the experiment, we read aloud an information sheet with some general instructions regarding the experiment (see Appendix). We then collected the participation consent forms and distributed envelopes containing a £5 show up fee and a 5-digit personal code number. Subjects would use this number to identify their decisions throughout the experiment and to collect their earnings at the end, thus ensuring their anonymity. We then informed participants that they will receive sequentially three decision sheets (A, B, and C), where they will be asked to decide how to allocate £10. We also informed them that after all decisions are made, one of the three decision sheets will be randomly selected for implementation, and explained in detail the selection procedure.3 Notice that the selection procedure is such that in expectation each of the three Jacobsen et al. (2011) also find substantial exiting in a setting where subjects are offered an opportunity to avoid having to share their endowment with a charity and are informed about this option ex-ante.

Immediately after the distribution of the envelopes with the personal code number, we randomly selected in each session a monitor to verify that the experimenters followed the protocol. The monitor was also responsible for the selection procedure. In particular, after all three decisions were made the monitor drew from an envelope containing cards with the numbers 1, 2 and 3 printed on them. The code number of each participant ended in either 1, 2 or

3. Decision A (B) [C] was implemented for participants having a code number ending in the first (second) [third]

decisions is implemented for one-third of participants in a given session.4

We then distributed to participants the instructions and decision sheet for each decision sequentially. After the three allocation decisions had been made and after selecting one of them for implementation, participants were informed that before carrying out the payment they had an opportunity to opt out. This implied that the decision randomly selected among the three would not be implemented and they would instead receive £10 at the end of the session. In particular, at

this stage we told participants:



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