Giving versus Taking: A “Real Donation” Comparison of Warm Glow and Cold Prickle

This paper revisits the question of “warm glow” vs. „cold prickle” and the provision of public goods. It also addresses the question, is giving in Dictator Games an expression of altruism or an artifact of experimentation? What is unique about this paper is that we employ a “real donation” lab experiment in a context-rich environment: contributions go to actual public goods (i.e., charitable organizations). Our study focuses directly on subjects‟ willingness to contribute to and take from a charity. We do this by allocating the initial endowment in one of three ways: either all to the subjects, all to the charity, or evenly between the two. Subjects are allowed to either contribute or take back as little or as much as they wish. We find that how the endowment is initially allocated is irrelevant when comparing the two extreme cases. On the other hand, we find evidence suggesting that, when the endowment is evenly split between the two parties, the initial even split seems to act as a powerful focal point: the final outcome is insignificantly different from the initial allocation.