Paper #1246

Title:

The size and distribution of donations: Effects of numbers of potential recipients

Authors:

Robin Hogarth and Emre Soyer

Date:

November 2010

Abstract:

Whereas much literature exists on “choice overload,” little is known about effects of numbers of alternatives in donation decisions. How do these affect both the size and distribution of donations? We hypothesize that donations are affected by the reputation of recipients and increase with their number, albeit at a decreasing rate. Allocations to recipients reflect different concepts of fairness – “equity” and “equality.” Both may be employed but, since they differ in cognitive and emotional costs, numbers of recipients are important. Using a cognitive (emotional) argument, distributions become more uniform (skewed) as numbers increase. In a survey, respondents indicated how they would donate lottery winnings of 50 Euros. Results indicated that more was donated to NGO’s that respondents knew better. Second, total donations increased with the number of recipients albeit at a decreasing rate. Third, distributions of donations became more skewed as numbers increased. We comment on theoretical and practical implications.

Keywords:

choice overload; donation decisions; fairness; equality; equity. leex

JEL codes:

D63; D54; D71; L31.

Area of Research:

Behavioral and Experimental Economics

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