Giving It All: The impact of a minimum restriction on donor behavior

Abstract: This paper uses a standard dictator game approach where each subject takes the role of the dictator and the counterpart is a charitable organization in order to explore changes in behavior following the introduction of minimum donation amount. While individuals in the control group could select any donation they wanted and keep the rest of the endowment, participants in the treatment group had to donate at least 30% of the endowment if they chose to donate. The results indicate that the introduction of a minimum in this setting did not significantly alter neither the number of donations nor the average donation. One effect of the minimum restriction appears instead to have been inducing those who would have otherwise donated below the minimum to donate at or slightly above the minimum. However, since this did not result in an increase in the overall mean, either the positive effect is small and this experiment did not have sufficient power to detect it in the full sample, or there are additional behavioral effects of the minimum being introduced which reduces donation amounts. Behavioral theories of warm glow and anchoring might be explanations of the observed results. Overall, the results provide preliminary evidence indicating that while a charity should not expect increased donations following the introduction of a minimum donation amount, it should not necessarily expect donations to drop significantly neither.