How Robust is Laboratory Gift Exchange?

Abstract

The gift-exchange game is a form of sequential prisoner's dilemma, developed by Fehr, Kirchsteiger, and Riedl (1993), and popularized in a series of papers by Ernst Fehr and co-authors. While the European studies typically feature a high degree of gift exchange, the few U.S. studies provide some conflicting results. We find that the degree of gift exchange is surprisingly sensitive to an apparently innocuous change - whether or not a comprehensive payoff table is provided in the instructions. We also find significant and substantial time trends in responder behavior, suggesting that behavior in our game is sensitive to strategic considerations.

Keywords: Gift-exchange, Strategic Motivation, Experiment

JEL Classification: A13, B49, C91, C92, J31