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You Owe Me

Author

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  • Ulrike Malmendier
  • Klaus M. Schmidt

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.

Suggested Citation

  • Ulrike Malmendier & Klaus M. Schmidt, 2017. "You Owe Me," American Economic Review, American Economic Association, vol. 107(2), pages 493-526, February.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:2:p:493-526
    Note: DOI: 10.1257/aer.20140890
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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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