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You Owe Me

Ulrike Malmendier and Klaus M. Schmidt
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Ulrike Malmendier: University of California at Berkeley
Klaus M. Schmidt: University of Munich

No 1, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: In business and politics, gifts are often aimed at influencing the recipient at the expense of third parties. In an experimental study, which removes informational and incentive confounds, subjects strongly respond to small gifts even though they understand the gift giver's intention. Our findings question existing models of social preferences. They point to anthropological and sociological theories about gifts creating an obligation to reciprocate. We capture these effects in a simple extension of existing models. We show that common policy responses (disclosure, size limits) may be ineffective, consistent with our model. Financial incentives are effective but can backfire.

Keywords: gift exchange; externalities; lobbyism; corruption; reciprocity; social preferences (search for similar items in EconPapers)
JEL-codes: C91 D62 D73 I11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
Date: 2017-01
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