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Is it Really the thought that Counts?

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  • JOHN L. SOLOW

    (University of Iowa)

Abstract

As a social institution, the exchange of goods as gifts is difficult to reconcile with the theory of rational choice. A gift of money allows the recipient to choose the goods to consume according to his own preferences, thereby presumably providing the maximum satisfaction per dollar given. The article shows that when individuals' utilities depend on others' consumption of particular goods, gifts of goods can be preferable to gifts of money. It shows further, by an example, that gift giving can be a Pareto-superior equilibrium of noncooperative individual behavior.

Suggested Citation

  • John L. Solow, 1993. "Is it Really the thought that Counts?," Rationality and Society, , vol. 5(4), pages 506-517, October.
    • Handle: RePEc:sae:ratsoc:v:5:y:1993:i:4:p:506-517
    DOI: 10.1177/1043463193005004006
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    References listed on IDEAS

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    Cited by:

    1. Birg, Laura & Pommeranz, Simon, 2018. "The deadweight loss of christmas - Reply," University of Göttingen Working Papers in Economics 361, University of Goettingen, Department of Economics.

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