It's Not Just the Thought that Counts: An Experimental Study on Hidden Cost of Giving

61 Pages Posted: 14 Nov 2014 Last revised: 8 Mar 2015

See all articles by Xiaofei Pan

Xiaofei Pan

George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES)

Erte Xiao

Monash University

Date Written: October 12, 2014

Abstract

Receiving a gift can create an impulse to reciprocate, even when doing so may be inefficient and potentially harmful to a third party. For instance, after receiving bribes, people may exhibit impulses to reciprocate. 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 predictions of existing theories of social preferences. We further show that the pure gift effect is independent of whether the gift is motivated by future returns. Our findings suggest that when reciprocating towards a gift becomes socially undesirable, 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, corruption, reciprocity, efficiency, externalities, social preferences

JEL Classification: C91, D03, D73

Suggested Citation

Pan, Xiaofei and Xiao, Erte, It's Not Just the Thought that Counts: An Experimental Study on Hidden Cost of Giving (October 12, 2014). Available at SSRN: https://ssrn.com/abstract=2523753 or http://dx.doi.org/10.2139/ssrn.2523753

Xiaofei Pan

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

Erte Xiao (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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