You Owe Me

Ulrike Malmendier and Klaus Schmidt ()

No 18543, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In many cultures and industries gifts are given in order to influence the recipient, often at the expense of a third party. Examples include business gifts of firms and lobbyists. In a series of experiments, we show that, even without incentive or informational effects, small gifts strongly influence the recipient's behavior in favor of the gift giver, in particular when a third party bears the cost. Subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless. Withholding the gift triggers a strong negative response. These findings are inconsistent with the most prominent models of social preferences. We propose an extension of existing theories to capture the observed behavior by endogenizing the "reference group" to whom social preferences are applied. We also show that disclosure and size limits are not effective in reducing the effect of gifts, consistent with our model. Financial incentives ameliorate the effect of the gift but backfire when available but not provided.

JEL-codes: C91 D62 D73 I11 (search for similar items in EconPapers)
Date: 2012-11
Note: EH LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published as Ulrike Malmendier & Klaus M. Schmidt, 2017. "You Owe Me," American Economic Review, vol 107(2), pages 493-526.

Downloads: (external link)
http://www.nber.org/papers/w18543.pdf (application/pdf)

Related works:
Journal Article: You Owe Me (2017)
Working Paper: You Owe Me (2017)
Working Paper: You Owe Me (2012)
Working Paper: You Owe Me (2012)
Working Paper: You Owe Me (2012)
Working Paper: You Owe Me (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18543

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18543

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().