Working Paper: NBER ID: w21475
Authors: Jean-Pierre Dub; Xueming Luo; Zheng Fang
Abstract: We empirically test an information economics based theory of social preferences in which ego utility and self-signaling can potentially crowd out the effect of consumption utility on choices. Two large-scale, randomized controlled field experiments involving a consumer good and charitable donations are conducted using a subject pool of actual consumers. We find that bundling relatively large charitable donations with a consumer good can generate non-monotonic regions of demand. Consumers also self-report significantly lower ratings of “feeling good about themselves” when a large donation is bundled with a large price discount for the good. The combined evidence supports the self-signaling theory whereby price discounts crowd out a consumer’s self-inference of altruism from buying a good bundled with a charitable donation. Alternative theories of motivation crowding are unable to fit the non-monotonic moments in the data. A structural model of self-signaling is fit to the data to quantify the economic magnitude of ego utility and its role in driving consumer decisions.
Keywords: self-signaling; prosocial behavior; cause marketing; consumer behavior; randomized controlled experiments
JEL Codes: C72; C93; D11; D80; M30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| altruistic self-image (D64) | consumer decision-making process (D12) |
| actual act of donating (D64) | consumption utility from donations (D64) |
| promotional offers (discounts and donations) (M31) | consumer purchasing behavior (D19) |
| large charitable donations + consumer goods (D64) | nonmonotonic demand regions (R22) |
| large donation + significant price discount (D64) | lower feelings of altruism (D64) |
| discounts (L42) | crowd out positive self-inference associated with altruistic behavior (D64) |
| moderate donation levels (D64) | discounts on ticket sales become nonmonotonic (L42) |