Work

It is not just about the price: Matching subsidies fail when the ask can be avoided

Year: 2026

Type: article

Abstract: Economists usually endorse the efficacy of price mechanisms, such as matching subsidies, to foster philanthropic contributions. Our experiments, however, show that the match only increases donations when avoiding the ask is not possible. Our data are consistent with a behavioural hypothesis of a “norm-signalling mechanism,” positing that a match increases the psychological cost of deviating from the norm of giving but only when the ask cannot be avoided. We show that indeed, giving zero, but not avoiding the ask, is perceived as less socially desirable under a match. Our findings highlight the possible limits and potential welfare losses of matching subsidies.

Source: The Economic Journal

DOI: 10.1093/ej/ueag044

Authors: Lata Gangadharan, Philip J Grossman, Lingbo Huang, Erte Xiao

Institutions: Monash University, University of Alaska Anchorage, Shandong University

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $4,463

Funders: Monash University, National Natural Science Foundation of China, Shanghai University of Finance and Economics