Academic journal article Monthly Labor Review

Charitable Donations on eBay

Academic journal article Monthly Labor Review

Charitable Donations on eBay

Article excerpt

How do buyers respond to sellers who make charitable donations? The answer to this question may help corporations that are considering making donations in the hopes that their goodwill will increase the prices consumers are willing to pay for goods and services. Researchers Daniel Elfenbein, Raymond Fisman, and Brian McManus research the impact that charitable donations have on sales at the popular online auction site eBay.com in their working paper titled, "Reputation, Altruism, and the Benefits of Seller Charity in an Online Marketplace" (NBER Working Paper 15614, December 2009).

In 2003, eBay introduced its Giving Works (GW) program. The GW program allows eBay sellers to donate anywhere from 10 percent to 100 percent of the sale price of an item to a charity of the seller's choice. The authors of the study analyzed data from over 150,000 auctions occurring between January 2005 and March 2008, and the study resulted in several interesting observations.

The researchers examined groups of products with nearly identical listings, the only difference between the listings being whether or not the sale of the product resulted in a contribution through GW. They found that, when 10 percent of the sale price went to charity, the probability that the item would sell increased by 6 percent and the sale price increased by 2 percent. …

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