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This is the fourth volume in the series Research in Experimental Economics that is organized as a compilation of papers on the same topic. Previous collections, on Emissions Permit Trading (volume 8), Market Power (volume 9) and Field Experiments (volume 10) have been well received, and it has become evident that the organization of these volumes into topical collections serves a useful function. The topic of the current volume, Charitable Auctions and Fundraising, has been a subject of intense policy interest. In recent years private, religious and state organizations have come to rely increasingly on fund-raising activities to generate revenues. Experimental methods provide an ideal context for conducting a dialog between economists, fund-raisers and policymakers regarding the revenue and social consequences of alternative fund-raising methods. The construction of this volume is largely the same as the previous themed volumes in this series. Rather than using an open submission process, we either knew of, or solicited contributions and we provided the editorial reviews.

Charitable lotteries represent one of today's most popular fund-raising schemes. This study begins by developing theory examining the optimal design of a charitable lottery. We show that any prize distribution is only optimal for a group of n symmetric agents with given risk preference. However, there exist multiple prize distributions that generate contributions approaching the optimal level over a range of individual risk posture. We test our theory using a battery of experimental treatments. Our results suggest that lotteries dominate the voluntary contribution mechanism (VCM) in terms of total dollars raised. Moreover, the performance of lotteries weakly depends on individual risk preference.

Purpose – Child sponsorship programs have been accused of representing children from the developing world in a manner described as “development porn” in their marketing communications, and of operating in such a way as to reinforce beliefs that people in the global South are powerless, dependent on help from the developed North. This research takes a critical, historical approach to investigating the marketing practices of Plan Canada, a subsidiary of one of the oldest and largest child sponsorship-based development agencies, in order to evaluate outcomes of charitable giving at the social and ideological level.

Methodology – We adopted a consumer storytelling theoretical lens to conduct narrative analysis of letters written by donors upon their return from visiting their sponsor children.

Findings – We reveal how even if aid recipients are treated with respect in marketing communications, ideological outcomes which reinforce Northern hegemony may still result.

Social implications – Although charitable acts by individuals are commonly encouraged and lauded, marketers may play a role in perpetuating negative outcomes that result from this consumer action, such as reinforcing notions of cultural difference and superiority.

Originality/value of paper – Only a few researchers have investigated the social and ideological outcomes of charitable giving. We investigate the outcome of charitable giving on the donor and recipient communities and relationship between these communities. Models of charitable giving need to be revised to include these outcomes.

This paper examines the impact of social comparisons on fundraising and charitable contributions. We present results from a field experiment involving contribution to a public radio station. Some callers are told of the contributions decisions of others, and other callers are given no such information. We find that providing ambitions (high) social comparison information can significantly increase contributions.

A large and growing literature examines the explicit social responsibility practices of companies. Yet corporations’ greatest consequences for social welfare arguably occur through indirect processes that shape the social fabric that sustains generosity and mutual support within communities. Based on this logic, we theorize and test a model that suggests two pathways by which large corporations affect community philanthropy: (1) through direct engagement in community philanthropy and (2) by indirectly influencing the efficacy of community social capital, defined as the relationships among community members that facilitate social support and maintenance of social welfare. Our analysis of United Way contributions in 136 US cities over the 46 years from 1952 to 1997 supports our model. We find that the presence of corporations weakens the contributions of both elite and working-class social capital on community philanthropy. Our findings thus contribute to a novel view of corporate social responsibility based on how corporations influence the social capital of the communities in which they are embedded.

Purpose – The purpose of this chapter is to serve as an introduction and motivation for Volume 13 of Research in Experimental Economics. In many cases, these introductory chapters are prefaces, limited to giving a roadmap of the volume and brief discussions of the chapters and why they were included. However, in some cases a more extensive discussion of the state of the literature and discipline can be useful. We have the same goal for this chapter.

Methodology – The methodology is that of a literature review combined with an analysis of the development of issues of endogeneity, self-selection, and formation in laboratory experimental research on public goods, charitable contributions, and nonprofit organizations.

Findings – This chapter traces the path of experimental public goods research as viewed through several lenses. There is a correspondence between the period of carefully controlled conditions in laboratory research and the framework of neoclassical economic theory (Lindahl/Samuelson). Indeed this is one of the original purposes of the earliest experiments by economists. However, there has been a distinct shift away from external control towards more endogenous evolution and selection over the past decade.

Originality – There have been several surveys of public goods research (many are referenced in this chapter). To our knowledge, this is the first to set out the history of, and the imperatives for, this new direction.

Traditional auction theory assumes that bidders possess values defined solely on the auctioned object. There may, however, be cases in which bidders possess preferences over the revenue achieved by the auctioneer. We present here a comprehensive framework of price-preference valuations, unifying several phenomena ranging from preference for charitable giving to shill bidding. We compare expected efficiency and revenue of first- and second-price auctions for some specific cases of key interest. We also incorporate heterogeneous bidder preferences and examine the effects of mis-specified beliefs and show that both are crucial for understanding these situations.

In this chapter, we analyze donor behavior based on the general segmentation bases. In particular, we study the behavior of the individual donor group's support for higher education. There has been very little research to date that discriminates the donor behavior of individual donors on the bases of their donation levels. The existing literature is limited to a general treatment of donor behavior using one of the available classical statistical discriminant techniques.

We investigate the individual donor behavior using both classical statistical techniques and a mathematical programming formulation. The study entails classifying individual donors based on their donation levels, a response variable. We use individuals’ income levels, savings, and age as predictor variables. For this study, we use the characteristics of a real dataset to simulate multiple datasets of donors and their characteristics. The results of a simulation experiment show that the weighted linear programming model consistently outperforms standard statistical approaches in attaining lower APparent Error Rates (APERs) for 100 replications in each of the three correlation cases.

An individual should be indifferent between a rebate subsidy of rate sr and a matching subsidy of rate sm=sr/(1-sr), and the total amount received by the charity should be the same regardless of subsidy type. Recent laboratory and field experiments contradict these straightforward predictions of standard economic theory: subjects consistently make decisions that result in larger amounts going to the charity under a matching subsidy than under an equivalent rebate subsidy. This paper tests whether this result is due to rebate-aversion – a preference by donors for a match over a rebate subsidy. Consistent with theory, we find no significant preference for one or the other subsidy scheme. However, we do find that, as in previous studies, participants selecting the matching subsidy made decisions that resulted in approximately twice the donations of participants selecting the rebate subsidy donated.