How does asymmetric information affect donations to beggars?

Abstract: In the current debate of donations to beggars, many individuals claim that they want to donate but that they refrain from doing so due to a lack of information about the beggar. The purpose of our study is to examine the impact asymmetric information has on altruistic behavior towards beggars. We conduct a laboratory experiment with donations to beggars in a double-blind dictator game using a Swedish sample. The recipients of the donations have been recruited through the organization Ny Gemenskap which works with homeless people in Stockholm. Each subject in each experimental session is randomly assigned to one of four treatment groups with different information regarding the usage of the donation and the cause of poverty for the recipient. Our results suggest that altruism is predominantly paternalistic in donations to beggars and that providing credible information about a specified usage of the donation has a significant effect on the average donation size. The results also suggest that altruism is unconditional on the cause of poverty for our sample.