Beliefs, observability and donation revision in charitable giving: evidence from an online experiment

Abstract

This study examines how beliefs interact with heterogeneous donation preferences in determining people's donation decisions and choices of revision and observability. We conducted an online experiment eliciting participants’ first-order beliefs, that is, beliefs about an average donor's contribution, with the opportunity of being recognized. We also provided the opportunity for donation revision to a group of randomly selected participants. Our study results show that people's first-order beliefs are positively correlated with their willingness to donate and their actual donations. Moreover, first-order beliefs also interact with people's heterogeneous donation preferences in jointly determining their decisions of donation revision and observability – their tendency to opt in for public recognition. Donors with low first-order beliefs and high donation preferences are most likely to opt in for recognition, but they are unlikely to revise their donations. Donors with high first-order beliefs and low donation preferences are most likely to revise their donations, but they are less likely to choose to be recognized. Donors with low first-order beliefs and low donation preferences display the lowest tendency toward revision and observability.