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Charity as a Signal of Trustworthiness

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  • Fehrler, Sebastian

    (University of Bremen)

Abstract

Being perceived as trustworthy comes with substantial economic benefits in many situations. Making other people think you are a trustworthy person may, therefore, be an important motive for charity and other forms of prosocial behavior, provided these activities work as signals of trustworthiness. This paper shows that donating money to an NGO substantially raises the other players' beliefs about the donors’ trustworthiness in a simple trust game. Consequently, donors receive higher transfers. The magnitude of these benefits is substantial.

Suggested Citation

  • Fehrler, Sebastian, 2010. "Charity as a Signal of Trustworthiness," IZA Discussion Papers 5299, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5299
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    Cited by:

    1. Ruth Beer & Hyun-Soo Ahn & Stephen Leider, 2018. "Can Trustworthiness in a Supply Chain Be Signaled?," Management Science, INFORMS, vol. 64(9), pages 3974-3994, September.
    2. Barinas-Forero, Andres, 2024. "Why should my group trust yours? Collective trust and trustworthiness under Economic Shocks," Documentos CEDE 21170, Universidad de los Andes, Facultad de Economía, CEDE.

    More about this item

    Keywords

    trustworthiness; charity; signaling; trust;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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