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It’s not just the thought that counts: An experimental study on the hidden cost of giving

Xiaofei Pan and Erte Xiao ()

Journal of Public Economics, 2016, vol. 138, issue C, 22-31

Abstract: Receiving a gift can create an impulse to reciprocate, even when doing so may be inefficient and potentially harmful to a third party. This paper provides a theoretical framework for a pure gift effect on reciprocity impulses and experimental evidence that such an effect exists: that is, a gift receiver will favor an actual gift giver over an intended gift giver, even if the intended gift giver incurred the same costs and signaled the same intention to give. This result contrasts with the predictions of existing theories on social preferences. We also show that the pure gift effect is present even when it leads to a less efficient outcome, or when the gift is given without the expectation of future returns. Our findings suggest that when reciprocating a gift becomes socially inefficient, it may be more advantageous to guard against gift receiving or to keep donations “secret” than to try to control the intent to give.

Keywords: Gift exchange; Intention; Reciprocity; Efficiency; Externalities; Social preferences (search for similar items in EconPapers)
JEL-codes: C91 D03 D73 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.jpubeco.2016.04.005

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