A Multi-Period Theoretical Model of Prosocial Behavior
Classical economic theory argues that individuals are rational and will use their income for their own advantage and advancement. However, charitable giving as well as giving in dictator game experiments cannot be completely explained by selfish concerns. The literature on prosocial behavior combines altruistic motives with greed and concern for social reputation to explain "unselfish" giving. This thesis presents a review of the motivations behind prosocial behavior as observed in charitable actions and dictator games, as well as their impact on economic decisions. The contribution of this thesis is twofold: First, it extends existing theories of prosocial behavior to a multi-period theoretical model of prosocial giving, which allows the donor to enjoy reputational benefits over time. Second, it models the donor's choice of how to behave prosocially by deciding whether to make a donation in the form of money or whether to donate a piece of personal value. The thesis also shows in which settings the donor is indifferent between her two choices and in which settings she has a specific preference. In particular, I find that present-oriented donors are more likely to donate money and that people with higher reputational concerns tend to donate more pieces of personal value than money.