Here's Something you Never Asked for, didn't Know Existed, and can't Easily Obtain: A Search Model of Gift Giving
AbstractGift giving is thought to be welfare decreasing. This claim rests on two key assumptions, namely, full information as to the whereabouts of all goods and the ability to reach the stores that contain desired goods costlessly. In this paper, we replace these two assumptions with the more realistic assumption of uncertainty about the location of goods. As a result, search costs ensue. In sharp contrast to existing economic models of gift giving, gifts in our model are given only when they enhance expected welfare, that is, the amount they save the receiver looking for the gift himself is higher than the expected price of unwanted gifts. The more difficult it is for the recipient to obtain the good he desires or the lower the price of this good, the more likely he is to receive it as a gift. Search costs affect not only the decision to give but also the choice of gift. We characterize the relationship between gift giving and the giverUs information about the recipient's preferences as well as her information about the gifts available in the economy. We use our model to explain a number of stylized facts about gift giving in modern and primitive societies.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0020.
Length: 28 pages
Date of creation: 2000
Date of revision:
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WELFARE ECONOMICS ; INFORMATION ; GOODS;
Find related papers by JEL classification:
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- D60 - Microeconomics - - Welfare Economics - - - General
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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