Trying and Failing : Biases in Donor Aversion to Rejection

Many non-profit organizations (NPOs) rely on donations of physical goods. However, not all donations are wanted or needed - the NPO may be space constrained, the donation may be of poor quality, or it may address a low-priority need. Accepting unwanted donations is costly to the NPO, which must sort, store, and dispose of them. Nonetheless, some NPOs hesitate to reject unwanted items, fearing negative repercussions for future donations. To better understand these repercussions, we study how donors respond to rejection using a controlled experiment. Subjects repeatedly choose whether to complete a real-effort task that generates a donation, which is rejected with a fixed probability whose value is unknown to the subjects. We measure subjects' donation decisions and beliefs about the probability that their donations are accepted. In addition, we compare these measures against a for-profit condition of the experiment, wherein the payment generated by the real-effort task is paid to the subject instead of an NPO. Our results identify a mechanism by which rejections affect donations, namely, via a reduction in donors' beliefs about future success. Moreover, we identify a novel instance of self-serving bias: when the effort required to make a donation is high, subjects' beliefs respond significantly more negatively to rejection in the donation condition than in the for-profit condition. Furthermore, subjects with similar beliefs complete the real-effort task less often in the donation condition. We propose ways in which NPOs can alleviate the negative impact of rejections