Altruistic Bluffing: An Experiment on Indirect Signalling

Abstract

People are often motivated to act in a way that sends a favourable signal about their character. This paper proposes a separation of signalling into its direct and indirect components. An observed behaviour can influence a person’s image directly when the behaviour itself is image-relevant, and it can influence a person’s image indirectly by changing people’s beliefs about an unobserved, image-relevant behaviour. In an experiment on charitable giving, we show that individuals engage in indirect signalling to make an altruistic bluff. Donors engage in an image-irrelevant behaviour (donating to many charities) to change observers’ beliefs about an unobserved, image-relevant behaviour (donating large amounts). This bluff works, as it leads observers to form beliefs that are positively biased.