scholarly journals Money Illusion in Charitable Giving in the Absence of Market Price Resistance

2021 ◽  
Vol 13 (3(J)) ◽  
pp. 24-33
Author(s):  
Jorge N. Zumaeta
Keyword(s):  
Charitable Giving ◽  
Market Price ◽  
Consumption Behavior ◽  
Economic Agents ◽  
Economic Decisions ◽  
Money Illusion ◽  
Economic Experiment ◽  
Fundraising Strategies ◽  
Behavioral Tendencies ◽  
Nominal Income

Money illusion occurs when individuals fail to differentiate nominal from real values when making financial and economic decisions. As a consequence, they do not adjust their consumption behavior according to real variables. We report an economic experiment to study whether money illusion appears in a very simple setting. It is very important to mention that the experiment was conducted in the context of charitable giving. Our experimental results showed the absence of money illusion among the participants. Our study suggests that money illusion is not present in the absence of price stickiness (market price resistance). This finding supports Shafir et al. (1997). The main objective of our study is to develop a better understanding of economic agents’ charitable giving behaviors as influenced by perceptions of nominal income. Charitable institutions could build fundraising strategies based on behavioral tendencies to the perception of income in nominal or real terms.

Neuroeconomic Perspectives for Economics

2021 ◽  
pp. 135-151
Author(s):  
Torben Larsen
Keyword(s):  
Carbon Emission ◽  
Risk Preference ◽  
Individual Characteristics ◽  
Creative Class ◽  
Rapid Rise ◽  
Client Server ◽  
Economic Agents ◽  
The Core ◽  
Economic Decisions ◽  
Social Liberalism

Neoliberalism is based on the economic rationality of economic agents, but both cognitive shortcomings and emotional biases in economics decision-making are well documented. A neuroeconomic model (NeM) comprising seven different nodes in a client-server-integrator system (cybernetics of the second order) presents a new approach to behavioral economics focusing risk-preference. The way that individual characteristics influence economic decisions depends on personality. Some people are principally pragmatic with little preference for risk, some are more rational with a moderate approach to risk and some enjoy risk. These people are identified respectively as Pragmatics, Rationalists and Explorers. The rapid rise of explorative behavior is the core of the creative class. Three macroeconomic focus points are outlined: 1) Equality by Universal Basic Income, 2) Environmental protection by Carbon Emission Tax, and 3) Individualized stress-management. In-all, neuroeconomics calls for center-based macroeconomic alternatives to the ruling Neoliberalism e. g. social liberalism or social democracy.

Is Charitable Giving a Zero-Sum Game? The Effect of Competition Between Charities on Giving Behavior

2021 ◽  
Author(s):  
Jan Schmitz
Keyword(s):  
Nonprofit Organizations ◽  
Charitable Giving ◽  
Price Competition ◽  
Dictator Game ◽  
Relative Price ◽  
Fundraising Strategies ◽  
Matching Grant ◽  
Good Provision ◽  
Zero Sum ◽  
Choice Set

The competition for donations between charities is tough. Yet, little is known about how giving behavior is affected by competition between charities. Do people have a need to satisfy their demand for giving by contributing to a particular charity? Or can the demand for doing good be satisfied by giving to any organization? In a donation dictator game, I vary competition between charities by (i) altering the set of similar real charities to which subjects can donate and (ii) changing the relative price of giving to a randomly selected charity in the choice set by introducing a matching grant. I find weak substitution between charities when giving to more than one charity is possible, as the donated amounts to individual charities decrease with the size of the choice set. At the same time, aggregate giving to all charities increases when charities are in competition. Intensified competition through an increase in the charitable giving market seems to attract new giving and increases overall public good provision. Price competition, however, does not attract new donations when market size is constant and charities compete for donations. These findings carry important insights for managers of nonprofit organizations and provide information on how to improve existing fundraising strategies. This paper was accepted by Yan Chen, decision analysis.

Does charity affect economic bargaining? Exploring gender × social distance interactions

2018 ◽  
Vol 16 (1) ◽  
pp. 109-128 ◽  
Author(s):  
Mario Testa ◽  
Antonio D’Amato
Keyword(s):  
Interaction Effect ◽  
Social Distance ◽  
Charitable Giving ◽  
Ultimatum Game ◽  
Business Students ◽  
Economic Behavior ◽  
Content Type ◽  
Non Profit ◽  
Financial Decisions ◽  
Economic Decisions

Purpose In recent years, it is increasingly common to find situations in which economic or financial decisions are combined with philanthropic or charity issues (for example, “pay what you can”, cause-related marketing initiatives and micro-insurance). How do people behave in these situations? This study aims to analyze whether charity impacts agents’ economic behavior and which factors (gender and social distance) influence these decisions. Design/methodology/approach Using a modified one-period ultimatum game that includes a charitable giving variable, the authors investigate agents’ behavior in economic decisions when philanthropic issues are considered, and they compare this behavior to purely economic negotiation without explicit philanthropic relevance. Using a sample of 352 undergraduate business students, the authors explore the interaction effect between gender and social distance on giving behavior. Findings The results of this study show that women offer more than men when philanthropic motivation is involved. However, the solicitation of a charitable sentiment is not an element that substantially shifts the offers beyond the value considered to be economically fair. Finally, women and men are both susceptible to self-image concerns. Research limitations/implications The results enable a more nuanced interpretation of gender differences in economic decisions when philanthropic or charity issues are involved. From a practical perspective, the findings could offer insights relevant to for-profit and non-profit organizations when they plan to provide products, services or investments with positive moral connotations or when they plan fundraising strategies. Originality/value Unlike existing laboratory studies, this study focuses on the effects that charity has on economic/financial decisions by exploring the interaction effect between the decision-maker’s gender and social distance on the outcome of the negotiation.

Interval Perception of Information and Consumer Behavior: Methodological Aspects

2007 ◽  
pp. 60-70
Author(s):  
D. Davydov
Keyword(s):  
Consumer Choice ◽  
Market Price ◽  
Interval Uncertainty ◽  
Subjective Perception ◽  
Economic Agents ◽  
Goods And Services ◽  
Economic Decision Making ◽  
Interval Approach ◽  
The Difference ◽  
Methodological Aspects

The article stresses the difference between objective presence and subjective perception of information by economic agents. The author considers some psycho-physiological aspects of information perception which are directly connected with the processes of economic decision-making. The article also discusses theoretical problems of modeling the perception of information about prices and quantities of goods and services on the part of consumers. Interval approach for uncertainty description is offered, the general consumer choice problem in case of interval uncertainty is formulated, and some practical issues in market price formation, the role of savings and macroeconomic equilibrium are discussed.

Economic Performance and Retrospective Voting in Canadian Federal Elections

1989 ◽  
Vol 22 (2) ◽  
pp. 377-388 ◽  
Author(s):  
J. R. Happy
Keyword(s):  
Economic Performance ◽  
Economic Voting ◽  
Disposable Income ◽  
Income Growth ◽  
Direct Impact ◽  
Attribution Of Responsibility ◽  
Retrospective Voting ◽  
Money Illusion ◽  
Nominal Income ◽  
Better Than

AbstractThis study examines the retrospective economic voting model for Canadian federal elections, 1930 through 1979. The analysis shows that change in personal or disposable income has a significant, direct impact on incumbency voting while inflation enters the voting calculus indirectly, as a (partial) deflator of nominal income, and unemployment has no effect. Disposable income is a better predictor of incumbency voting than is personal income, nominal income variables predict better than real values and variability in income performance is negatively related to incumbency voting. The study concludes that voter attribution of responsibility for income performance is focussed and specific, income stability as well as income growth are demanded through incumbency voting, and voters are affected by money illusion.

scholarly journals Price competition and nominal illusion: experimental evidence and a behavioural model

SERIEs ◽  
2021 ◽  
Author(s):  
Antonio J. Morales ◽  
Enrique Fatas
Keyword(s):  
Exchange Rate ◽  
Housing Market ◽  
Experimental Evidence ◽  
Price Competition ◽  
Empirical Studies ◽  
Nominal Exchange Rate ◽  
Local Market ◽  
Market Prices ◽  
Economic Agents ◽  
Money Illusion

AbstractThe standard approach to nominal illusion in Economics sees it as a transitory phenomenon, as economic agents eventually see through the nominal veil, making the right choices. Recent empirical studies suggest that money illusion may persist, distorting real prices in a variety of economic environments, including the housing market and the stock market. In this paper, we explore the emergence and persistence of nominal illusion in an experimental entry game where firms must choose which local market to enter, and then compete in prices. All local markets are equivalent in real terms and they only differ in the currency the price competition is run under. Our experimental results show a positive, persistent and monotone effect of the nominal exchange rate on market prices, statistically significant for large enough exchange rate. We provide an explanation in terms of players simplifying the choice set using discrete grids.

scholarly journals TOMATO MARKET INTEGRATION: A CASE STUDY OF THE DURBAN AND JOHANNESBURG FRESH PRODUCE MARKETS IN SOUTH AFRICA

2018 ◽  
Vol 49 (3) ◽  
pp. 239-249
Author(s):  
Lloyd Baiyegunhi ◽  
Stanley Sharaunga ◽  
Sphelele Dlangisa ◽  
Nonkhululeko Ndaba
Keyword(s):  
South Africa ◽  
South African ◽  
Market Integration ◽  
Fresh Produce ◽  
Wholesale Price ◽  
Market Price ◽  
Policy Implications ◽  
Economic Agents ◽  
High Degree

In a market-driven economy, price indicators guide and regulate production, consumption and marketing decisions over time, form and place. Identifying the causes of price differentials across markets is important for understanding markets. This study analyzes the market price integration of tomato in Durban and Johannesburg fresh produce markets in South Africa, using secondary monthly time series of wholesale price data for the period 2008–2012. Cointegration was tested using the Augmented Engle-Granger (AEG) test, while the direction of causality between Johannesburg and Durban prices was tested using the error correction model (ECM). The results showed that the two markets were integrated. Furthermore, the results also revealed that following a shock to the market that causes disequilibrium, economic agents take about a month to adjust back to equilibrium; the response to the shock is faster in the Durban market than in the Johannesburg market. The high degree of market integration suggests that the South African fresh produce market is quite competitive and provides little justification for government intervention designed to improve competitiveness or to enhance market efficiency. Policy implications for an improved and effective tomato marketing program were also discussed.

scholarly journals Pergeseran Faktor Psikologi Penentu Keputusan Pembelian (Studi Kasus Sayuran Organik Di Pasar Modern Kota Palembang)

2021 ◽  
Vol 21 (2) ◽  
pp. 129-146
Author(s):  
Dessy Adriani ◽  
Yandri Ridho Pratama ◽  
Laila Husin
Keyword(s):  
Sampling Method ◽  
Sampling Technique ◽  
Psychological Factor ◽  
Survey Method ◽  
Microeconomic Theory ◽  
Purchasing Decisions ◽  
Consumption Behavior ◽  
Economic Decisions ◽  
Level Of Importance ◽  
Determining Factor

Abstract Increased awareness of the importance of health is also thought to have an impact on the consumption behavior of organic vegetables. So far, more research on purchasing decisions has been analyzed with consideration of microeconomic theory. Along with the development of information and knowledge, purchasing decisions are thought not only to be economic decisions but also to psychological considerations, especially the determinant factors. This research was carried out in the modern market of Palembang city. The research method was a survey method and the sampling method was an accidental sampling technique. Data analysis using Factorial Multivariate Analysis. The results of the analysis show psychological factors that influence purchasing decisions in terms of the importance level are (1) Perception, (2) Learning, (3) Attitudes, and (4) consistency. The analysis results differ with the level of theoretical importance. The level of importance based on the analysis are (1) motivation, (2) perception, (3) learning, and (4) attitude. The results of this study indicate that motivation is no longer a psychological factor in purchasing decisions, and there is a shift in factors where perception is the first and most important determining factor.

Disgusted and Afraid: Consumer Choices under the Threat of Contagious Disease

2020 ◽  
Vol 47 (3) ◽  
pp. 373-392 ◽  
Author(s):  
Chelsea Galoni ◽  
Gregory S Carpenter ◽  
Hayagreeva Rao
Keyword(s):  
Consumer Behavior ◽  
Empirical Data ◽  
Daily Life ◽  
Emotional States ◽  
Consumption Behavior ◽  
Disease Research ◽  
Data Analyses ◽  
Contagious Disease ◽  
Behavioral Tendencies ◽  
Practical Implications

Abstract Consumers regularly encounter cues of contagious disease in daily life—a commuter sneezes on the train, a colleague blows their nose in a meeting, or they read recent headlines about the dangerous spread of a disease. Research has overwhelmingly argued that the dominant response to these cues is disgust—an emotion that leads to a desire to reject and avoid potential contamination. We argue, however, that contagious disease cues can also elicit fear. Across four experiments and two large empirical data analyses of the presence of contagious disease on actual consumption behavior, we find that cues of contagious disease increase both fear and disgust, and these emotions together form a unique behavioral tendency with respect to consumer behavior. Relative to either emotion alone, disgust and fear increase preference for more-familiar products asymmetrically over less-familiar ones. These results contribute theoretically to research on complex emotional states and the behavioral tendencies of emotions, document a systematic and consequential impact of contagious disease cues on real consumption behavior, and have significant practical implications for marketers.

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