Joint with Youngrok Kim (University of Hyogo)

Abstract

Donors entrust their resources to charitable organizations, which use these to carry out activities that contribute to society. Thus, the donation market carries the potential for moral hazard on the part of charitable organizations. However, empirical insights into the negative consequences of this problem are scarce. This study creates a unique game by incorporating elements of principal-agent relationships into the dictator game, in order to quantitatively examine the consequences of moral hazard in the donation market through laboratory experiments. The results reveal that moral-hazard environments hinder the average donation amount from donors and, furthermore, decrease recipients’ average payoffs. To address this negative outcome, non-binding promises are introduced to inform donors beforehand of the actions to be taken by charitable organizations. Although these promises succeed in offsetting the decrease in donation amounts, they do not sufficiently improve recipient welfare.

Discussion Paper

• HIAS Discussion Paper Series (Hitotsubashi Institute for Advanced Study, Hitotsubashi University), 2024年4月. [Full-text link]

Proceeding

• “Patron–Dictator Game：寄付者と慈善団体間の情報の非対称性に関する経済実験”, 行動経済学, 第17回大会プロシーディングス, pp.S5–S8, 2024. [Japanese] [Full-text link]