Journal Article

Charity as a Substitute for Reputation: Evidence from an Online Marketplace

Daniel W. Elfenbein, Ray Fisman and Brian Mcmanus

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 79, issue 4, pages 1441-1468
Published in print October 2012 | ISSN: 0034-6527
Published online March 2012 | e-ISSN: 1467-937X | DOI: https://dx.doi.org/10.1093/restud/rds012
Charity as a Substitute for Reputation: Evidence from an Online Marketplace

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Consumers respond positively to products tied to charity, particularly from sellers that are relatively new and hence have limited alternative means of assuring quality. We establish this result using data from a diverse group of eBay sellers who “experiment” with charity by varying the presence of a donation in a set of otherwise matched product listings. Most of charity's benefits accrue to sellers without extensive eBay histories. Consistent with charity serving as a quality signal, we find fewer customer complaints among charity-intensive sellers.

Keywords: Signalling; Corporate philanthropy; Social responsibility; Reputation; Altruism; D44; H41; L81; M14; M31

Journal Article.  13423 words.  Illustrated.

Subjects: Publicly Provided Goods ; Marketing ; Services ; Corporate Social Responsibility ; Market Structure and Pricing

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