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Does the Use of Financial Information Make Donors Behave More Rationally?
Evelyn A McDowell,
Rider University
ABSTRACT. This study investigates whether donors use financial information and whether using these data help donors make choices that are consistent with expectations. Using a modified dictator game and internet behavioral research techniques, subjects make actual donations to two organizations. One of them is efficient and the other is relatively inefficient. To better understand donor preferences, I also examine whether a social preference, responding to the norm of reciprocity, explains otherwise unexpected behavior. I find that forty percent of the participants made contributions without viewing the efficiency signals of both organizations and, therefore, financial information may not be as relevant to individual as once believed. Donors who used financial information made decisions more consistent with the expectations of researchers, regulators, and consumer advocacy groups.
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