Revealing the Preferences of Social Financiers

Christoph Starke () and Steffen Burchhardt ()
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Christoph Starke: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg
Steffen Burchhardt: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg

No 140002, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: Financiers of social entrepreneurs are typically characterized as having some form of prosocial or CSR related objective. While in some studies such objectives have been formulated on an analytically inconvenient level, other contributions are limited only to charity finance. In this paper we identify Fehr and Schmidt’s inequality aversion as an analytically tractable and most basic motivation of social financiers in general. Specifically, we show that the financiers’ decision structures and their observable behavior coincide with the experimental findings of Fehr and Schmidt (1999). Moreover, we derive behavioral implications for social entrepreneurs. Paradoxically, given that financiers do not prefer a self-consumption of the social service, they contribute more if the entrepreneur provides them nevertheless.

Keywords: inequality aversion; social entrepreneurship; financier; public good; social service (search for similar items in EconPapers)
JEL-codes: D03 D31 L26 L31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014-02
New Economics Papers: this item is included in nep-ent, nep-exp and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:mag:wpaper:140002

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