Wednesday, 22nd February 2017
16:00 - 17:00
Butler Room - Nuffield College
Does Gift Competition Hurt? – Experimental Study on Multilateral Gift Exchange
Gift exchange often benefits the gift giver in bilateral setting. However, how does gift competition affect the receiver behavior and givers payoff remain largely unknown. This experimental study shows that gift competition hurts gift givers and benefits gift receiver because givers significantly increase the size of their gifts. They do so rationally because the payoff function generated by receiver’s behavior demonstrates the nature of prisoner dilemma. Gift givers on average have correct beliefs about their payoff function and the competitor’s gift, but they also over-attribute payoffs lower than expectations to the competitor giving high gift. Providing feedbacks on the competitor’s gift and payoff significantly reduces belief errors but do not affect actions.