Three Essays on the Economics of Philanthropy

This dissertation studies the economics of prosocial behavior. More specifically, I investigate experimentally how prosocial incentives, pledges, and altruistic self-concept affect individuals' prosocial behaviors in three chapters. Chapter 1 studies the role of self-chosen goals in shaping prosocial incentives' motivation on individuals' performance. The prosocial incentive is a way of motivation where workers' payments are associated with an additional reward to the charities. It is now widely accepted by the firms because it helps build the corporate culture, and boosts employee's morale, performance, and job satisfaction. However, recent studies have shown that a larger reward size does not necessarily increase workers' prosocial incentives. To solve this limitation, I implement a self-chosen goal scheme along with the incentives. I design an online experiment in which participants set goals for themselves engaging in real effort tasks. Participants obtain prosocial rewards only when they reach their goals. My results show that workers who receive prosocial incentives improve their performance by setting higher goals and achieving them. Moreover, when provided with the opportunity to receive large rewards, workers who are matched with the charity's mission will set higher goals to motivate themselves further to make additional efforts. My findings suggest prosocial incentives are comparable to monetary incentives in motivating workers within a self-chosen goal scheme. The preferred type of incentive depends on the firm's target and worker's heterogeneity. Chapter 2 investigates experimentally whether pledges with respect to when one volunteer increase volunteering. As shown in previous literature, the effect of pledging on volunteering is ambiguous. On one hand, pledges can boost volunteering as it offers volunteers the option to choose when to help others. On the other hand, pledges open the doors for individuals to find more ways to excuse themselves from having to volunteer. In this paper, we study how volunteering decisions are affected by pledges using an online experiment. We find that pledges increase reneging on promises to volunteer, but total effort donations do not change. We also develop a simple model that helps explain the ways in which relevant parameters affect behaviors in our experiment. In particular, our model predicts that when given the opportunity to pledge to volunteer, people with high altruism or high warm-glow prefer to volunteer sooner rather than later, while higher future expected participation costs and lower expected reneging costs result in lower rates of rejection immediately. Moreover, pledges increase reneging behaviors on the future date, because those who want to volunteer don't delay their volunteering; however, those whose costs of saying "no" are high, are driven to postpone their rejection and renege on the future date. Chapter 3 digs deeper to study the effect of personality traits on the willingness to make and keep a promise to volunteer. In our experiment, Amazon Mechanical Turk participants are given the option to volunteer by donating time and effort to a charity. They also answer a series of questionnaires, including the Big Five personality test and attitudinal questionsthat we use to construct an index representing altruistic self-concept. Self-concept refers to the way we describe and evaluate ourselves. We find that altruistic self-concept mediates how personality affects volunteering decisions. In particular, agreeableness has a strong influence on the probability of making and keeping promises to volunteer through its effect on altruistic self-concept. Our findings have useful implications for non-profit organizations. Agreeable individuals who evaluate and describe themselves as altruistic can be more helpful and dependable, so that the organizations can find ways to strengthen altruistic self-concept, thereby positively influencing prosociality in the workplace.