Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field

Bailey Norwood; Jayson L Lusk

doi:10.2202/1538-0645.1413

Article

Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field

Bailey Norwood and Jayson L Lusk

Published/Copyright: December 31, 2005

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From the journal Contributions in Economic Analysis & Policy Volume 5 Issue 2

Abstract

Eliciting actual donations toward a public good has been proposed as a means of estimating a lower bound to individuals’ compensating surplus, and can be accomplished using mail/phone surveys or field experiments. This study shows that when warm-glow is present, the elicitation instrument decreases the transaction costs of donating. This presents an obstacle to using the donation mechanism. As a remedy, we propose the use of a multi-donation mechanism where subjects can direct their donation to alternative public goods. Results from a field experiment confirm this instrument-induced bias can be large, suggesting field experiment practitioners should seriously consider how their experimental procedures may alter economic behavior.

Keywords: donations; donation mechanism; nonmarket valuation; warm glow

Published Online: 2005-12-31

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Articles in the same Issue

https://doi.org/10.2202/1538-0645.1413

Keywords for this article

donations; donation mechanism; nonmarket valuation; warm glow