Abstract

http://ssrn.com/abstract=2396182
 
 

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The Non-Monetary Nature of Gifts


Lars Stole


University of Chicago - Booth School of Business

Canice Prendergast


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

October 1, 2000

European Economic Review, Vol. 45, 2001

Abstract:     
This paper addresses the prevalence of non-monetary gifts over more highly valued and efficient monetary transfers in social relationships. We demonstrate that under a wide variety of circumstances, inefficient non-monetary gifts will be offered by a donor in lieu of cash in order to signal the donor's quality of information about the recipient's preferences. This result emerges because gift giving is inefficient relative to cash, and not because of any arbitrary assumptions regarding communication. In particular, the donor has available the strategy of offering cash and saying what he would have purchased. Nonetheless, there is still an important equilibrium role for buying gifts.

Keywords: Gifts, Non-monetary exchange, Signaling

JEL Classification: A13, D10, D64, D82, Z1

Accepted Paper Series


Not Available For Download

Date posted: February 16, 2014  

Suggested Citation

Stole, Lars and Prendergast, Canice, The Non-Monetary Nature of Gifts (October 1, 2000). European Economic Review, Vol. 45, 2001. Available at SSRN: http://ssrn.com/abstract=2396182

Contact Information

Lars A. Stole (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)
Canice Prendergast
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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