Giving versus Taking: A “Real Donation” Comparison of Warm Glow and Cold Prickle in a Context-Rich Environment

This paper revisits the question of framing and the provision of public goods. It also addresses the question, is giving in Dictator Games an expression of altruism or an artefact of experimentation? What is unique about this paper is that we employ a “real donation” lab experiment in a context-rich environment: contributions go to actual public goods (i.e. charitable organizations). Our study focuses directly on subjects’ willingness to contribute to and take from a charity. We do this by allocating the initial endowment in one of three ways: either all to the subjects, all to the charity, or evenly between the two. Subjects are allowed to either contribute or take back as little or as much as they wish. We find that framing is irrelevant when comparing the two extreme cases (i.e. the endowments initially allocated all to the subjects or all to the charity); the final amount allocated to the charity is independent of how the choice option is framed. On-the-other-hand, we find evidence suggesting that, when the endowments are evenly split between the two parties, the initial even split seems to act as a powerful focal point: the final outcome is insignificantly different from the initial allocation. JEL codes: H4, D64, C72, C91