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

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.