Transaction Costs, the Opportunity Cost of Time and Procrastination in Charitable Giving

47 Pages Posted: 24 Dec 2013 Last revised: 22 Feb 2016

See all articles by Stephen Knowles

Stephen Knowles

University of Otago - School of Business - Department of Economics

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Date Written: April 15, 2015

Abstract

We conduct a laboratory experiment to study whether giving people more time to donate to charity reduces donations. People may intend to donate, but because of the transaction costs of doing so, postpone making the payment until they are less busy, and having postponed making the donation once, keep postponing. We conjecture that transaction costs will have a greater effect on donations if the solicitation is received when the opportunity cost of time is high. We find evidence of a transaction cost reducing donations, with the size of this effect depending on the opportunity cost of time, but no statistically significant evidence that giving people more time to donate increases procrastination and thus reduces donations.

Keywords: charitable giving, dictator game, transaction costs, opportunity cost of time, procrastination

JEL Classification: C91, D64

Suggested Citation

Knowles, Stephen and Servátka, Maroš, Transaction Costs, the Opportunity Cost of Time and Procrastination in Charitable Giving (April 15, 2015). Available at SSRN: https://ssrn.com/abstract=2371429 or http://dx.doi.org/10.2139/ssrn.2371429

Stephen Knowles

University of Otago - School of Business - Department of Economics ( email )

PO Box 56
Dunedin
New Zealand

Maroš Servátka (Contact Author)

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory ( email )

Sydney
Australia

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