There is a widespread belief that peer effects are important in charitable giving, but little evidence on how donors respond to their peers. Analysing a unique dataset of donations to online fundraising pages, we find positive and sizeable peer effects: a £10 increase in the mean of past donations increases giving by £2.50, on average. Donations respond to both very large and very small amounts and to changes in the mode. We find little evidence that donations signal charity quality – our preferred explanation is that donors use information on earlier donations to decide what is appropriate for them to give.
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Smith et al. (2013) studied this question.