Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 664: Generosity

Tore Ellingsen () and Magnus Johannesson ()
Additional contact information
Tore Ellingsen: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Magnus Johannesson: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: We develop a simple model of generous behavior. It is based on the premise that some people are generous, but everyone wants to appear generous. Although non-monetary donations are always inefficient, our model predicts donors to favor non-monetary donations when the inefficiency is relatively small and when the recipient is sufficiently rich. The model helps to explain the prevalence of volunteering, the nature of Christmas gifts, and the taboo against paying cash in return for friendly favors. The model also explains why it is socially more acceptable to ask for favors than for money.

Keywords: Altruism; Non-monetary gifts; Volunteering

JEL-codes: A13; J20

23 pages, February 1, 2007

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