Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104372
Title: 
Authors: 
Malmendier, Ulrike
Schmidt, Klaus M.
Year of Publication: 
2012
Series/Report no.: 
Munich Discussion Paper 2012-30
Abstract: 
In many cultures and industries gifts are given in order to influence the recipient, often at the expense of a third party. Examples include business gifts of firms and lobbyists. In a series of experiments, we show that, even without incentive or informational effects, small gifts strongly influence the recipient’s behavior in favor of the gift giver, in particular when a third party bears the cost. Subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless. Withholding the gift triggers a strong negative response. These findings are inconsistent with the most prominent models of social preferences. We propose an extension of existing theories to capture the observed behavior by endogenizing the “reference group” to whom social preferences are applied. We also show that disclosure and size limits are not effective in reducing the effect of gifts, consistent with our model. Financial incentives ameliorate the effect of the gift but backfire when available but not provided.
Subjects: 
Gift exchange
externalities
lobbyism
corruption
reciprocity
social preferences
JEL: 
C91
D73
I11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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