Charity as a Substitute for Reputation: Evidence from an Online Marketplace
'Consumers respond positively to products tied to charity, particularly from sellers that are relatively new and hence have limited alternative means of assuring quality. We establish this result using data from a diverse group of eBay sellers who experiment with charity by varying the presence of a donation in a set of otherwise matched product listings. Most of charity's benefits accrue to sellers without extensive eBay histories. Consistent with charity serving as a quality signal, we find fewer customer complaints among charity-intensive sellers.' The finding to lead with: the effect is concentrated in sellers who have no reputation and works as a substitute for one. The 2009 NBER workin
'Consumers respond positively to products tied to charity, particularly from sellers that are relatively new and hence have limited alternative means of assuring quality. We establish this result using data from a diverse group of eBay sellers who experiment with charity by varying the presence of a donation in a set of otherwise matched product listings. Most of charity's benefits accrue to sellers without extensive eBay histories. Consistent with charity serving as a quality signal, we find fewer customer complaints among charity-intensive sellers.' The finding to lead with: the effect is concentrated in sellers who have no reputation and works as a substitute for one. The 2009 NBER workin
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Elfenbein, D. W., Fisman, R., & McManus, B. (2012). Charity as a Substitute for Reputation: Evidence from an Online Marketplace. The Review of Economic Studies, 79(4), 1441-1468. doi:10.1093/restud/rds012.