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Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace

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  • Daniel Elfenbein
  • Raymond Fisman
  • Brian McManus

Abstract

We investigate the impact of charity tie-ins on transaction probabilities and sale prices using a large database of eBay auctions. We examine "natural experiments" of precisely matched clusters of charity and non-charity auctions with identical titles, subtitles, sellers, and start prices. We find a 6 to 14 percentage point increase in sale probability and a 2 to 6 percent greater maximum bid for charity items, depending on the fraction of auction proceeds that is donated to charity. The impact on sale probability and price is most pronounced among sellers without extensive eBay histories, suggesting that consumers view charity as a signal of seller quality and a substitute for reputation. We also find that charity-tied products by all sellers are more likely to sell (and at higher prices) immediately following Hurricane Katrina, implying that consumers derive direct utility from seller charity at times when charity is particularly salient.

Suggested Citation

  • Daniel Elfenbein & Raymond Fisman & Brian McManus, 2009. "Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace," NBER Working Papers 15614, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:15614
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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