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Wednesday, May 27, 2009

Does Taking Advantage Of A Deal Entice You To Give More?

A new study by University of Maryland economists, Andreas Lange and Andrew Stocking demonstrates that donors, just like consumers, appreciate a deal and associate quality with price.
In the study, over 700,000 individuals were asked to become a member of a nonprofit organization. The economists divided these individuals into the following three groups:
  1. those asked to give a minimum of $35 to join,
  2. those asked to give a minimum of $25 to join,
  3. and those asked to give a minimum of $25 which was promoted as a discounted rate.
The first and second groups had the same response rate of 0.23%, although the first group gave more ($45.21) on average than the second ($36.32). Interestingly, the response rate was higher (0.27%) when people perceived that they were getting a special deal on their membership fee. Individuals in the third group that took advantage of the offer gave on average $37.94.

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