Market punishment of strategic generosity: An empirical examination of NFT charity fundraisers

NFT charity auctions, which involve the sale of artistic works as non-fungible tokens with proceeds donated to a philanthropic cause, have been an important development in crypto donations. Due to the potential for rapid increases in the value of charity NFTs, donors may be perceived as motivated by financial incentives. We explore how social image may translate into quantifiable economic penalties for donors in the context of a large NFT charity auction. We examine the consequences of charity NFT purchase and subsequent relisting, finding that donors who engage in such behavior experience a systematic penalty in terms of the prices in the later sale of other NFTs in their portfolio. Moreover, we demonstrate that these effects accrue to donors who re-listed their charity NFTs for sale shortly after purchase, and to those who are more socially embedded in the NFT community.