Adding exchange to charity: a reference price explanation

Abstract

Charities often request donations while offering a near-worthless token, like a key chain, in exchange. Little research has examined whether such ‘exchange’ requests are met with higher compliance rates than simply asking people to donate. Our studies suggest that in simple donation settings people may have difficulties in estimating a socially acceptable donation amount and therefore prefer opportunities that provide them with an anchor price. The value of a material good in a donation setting can play this anchoring role and signal a reference price. To the extent that the suggested reference price is low enough, exchange requests lead to more compliance than simple donation requests. However, our results indicate that, when accompanied by specified amounts, simple donation requests result in even better compliance rates than exchange requests.