When giving is cheap

A game reveals what lies beneath our most charitable impulse.

When a philanthropist pledges to match any funds raised by a favorite charity, some donors give more money. Their altruism is motivated in part by a sense of economic efficiency: it would be a shame to let those matching funds go to waste. In a matching-fund scenario, donating money is “cheap” — an individual’s $50 donation means the charity gets $100. But how do people respond when giving is expensive? And what does their behavior suggest about their preferences for efficiency and equity?

Professor Ray Fisman studied individuals’ giving preferences with Shachar Kariv of UC Berkeley and Daniel Markovits of Yale. In experiments using a computer game, the researchers presented students with 50 charts depicting donation budgets, with different scenarios for how the funds would be distributed. For each budget, students had to allocate the funds between themselves and another student. In some rounds, the receiver would receive more than $1 for each dollar donated, so the giver could maximize the size of the pie by being generous. In other rounds, giving is expensive, so keeping more money for oneself maximizes the total sum.

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