IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v107y2013icp19-30.html
   My bibliography  Save this article

Social networks and externalities from gift exchange: Evidence from a field experiment

Author

Listed:
  • Currie, Janet
  • Lin, Wanchuan
  • Meng, Juanjuan

Abstract

This paper asks whether gift exchange generates externalities for people outside of the bilateral relationship between the gift giver and recipient, and whether the nature of this relationship is affected by social networks. We examine this question in the context of a field experiment in urban Chinese hospital outpatient clinics. We first show that when patients give a small gift, doctors reciprocate with better service and a fewer unnecessary prescriptions of antibiotics. We then show that gift giving creates externalities for third parties. If two patients, A and B are perceived as unrelated, B receives worse care when A gives a gift. However, if A identifies B as a friend, then both A and B benefit from A's gift giving. Hence, we show that gift giving can create positive or negative externalities, depending on the giver's social distance to the third party.

Suggested Citation

  • Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2013. "Social networks and externalities from gift exchange: Evidence from a field experiment," Journal of Public Economics, Elsevier, vol. 107(C), pages 19-30.
  • Handle: RePEc:eee:pubeco:v:107:y:2013:i:c:p:19-30
    DOI: 10.1016/j.jpubeco.2013.08.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S004727271300162X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jpubeco.2013.08.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Currie, Janet & Lin, Wanchuan & Zhang, Wei, 2011. "Patient knowledge and antibiotic abuse: Evidence from an audit study in China," Journal of Health Economics, Elsevier, vol. 30(5), pages 933-949.
    2. Gary Charness, 2004. "Attribution and Reciprocity in an Experimental Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 665-688, July.
    3. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    4. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 255-283.
    5. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    6. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 437-459.
    7. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    8. Ulrike Malmendier & Klaus M. Schmidt, 2017. "You Owe Me," American Economic Review, American Economic Association, vol. 107(2), pages 493-526, February.
    9. David K. Levine, 1998. "Modeling Altruism and Spitefulness in Experiment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 593-622, July.
    10. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2013. "Do Wage Cuts Damage Work Morale? Evidence From A Natural Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 853-870, August.
    11. Strassmair, Christina, 2009. "Can intentions spoil the kindness of a gift? - An experimental study," Discussion Papers in Economics 10351, University of Munich, Department of Economics.
    12. Carmichael, H Lorne & MacLeod, W Bentley, 1997. "Gift Giving and the Evolution of Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 485-509, August.
    13. John A. List, 2006. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 1-37, February.
    14. Klaus Abbink & Bernd Irlenbusch & Elke Renner, 2002. "An Experimental Bribery Game," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 18(2), pages 428-454, October.
    15. Ernst Fehr & Armin Falk, 1999. "Wage Rigidity in a Competitive Incomplete Contract Market," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 106-134, February.
    16. Simon Gächter & Armin Falk, 2002. "Reputation and Reciprocity: Consequences for the Labour Relation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(1), pages 1-26, March.
    17. Avinash Dixit, 2003. "Trade Expansion and Contract Enforcement," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1293-1317, December.
    18. Andreoni, James & Rao, Justin M., 2011. "The power of asking: How communication affects selfishness, empathy, and altruism," Journal of Public Economics, Elsevier, vol. 95(7), pages 513-520.
    19. Charness, Gary & Haruvy, Ernan & Sonsino, Doron, 2007. "Social distance and reciprocity: An Internet experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 88-103, May.
    20. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    21. Robert Dur, 2009. "Gift Exchange in The Workplace: Money or Attention?," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 550-560, 04-05.
    22. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    23. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 114(497), pages 684-708, July.
    24. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    25. Karen Eggleston & Li Ling & Meng Qingyue & Magnus Lindelow & Adam Wagstaff, 2008. "Health service delivery in China: a literature review," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 149-165, February.
    26. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    27. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    28. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    29. Sebastian Kube & Michel Andre Marechal & Clemens Puppe, 2012. "The Currency of Reciprocity: Gift Exchange in the Workplace," American Economic Review, American Economic Association, vol. 102(4), pages 1644-1662, June.
    30. Buchan, Nancy R. & Johnson, Eric J. & Croson, Rachel T.A., 2006. "Let's get personal: An international examination of the influence of communication, culture and social distance on other regarding preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 60(3), pages 373-398, July.
    31. Karen Eggleston & Yu‐Chu Shen & Joseph Lau & Christopher H. Schmid & Jia Chan, 2008. "Hospital ownership and quality of care: what explains the different results in the literature?," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1345-1362, December.
    32. Charness, Gary & Gneezy, Uri, 2008. "What's in a name? Anonymity and social distance in dictator and ultimatum games," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 29-35, October.
    33. Helen Bernhard & Ernst Fehr & Urs Fischbacher, 2006. "Group Affiliation and Altruistic Norm Enforcement," American Economic Review, American Economic Association, vol. 96(2), pages 217-221, May.
    34. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, vol. 86(3), pages 653-660, June.
    35. Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-950, October.
    36. Karen Eggleston & Winnie Yip, 2004. "Hospital Competition under Regulated Prices: Application to Urban Health Sector Reforms in China," International Journal of Health Economics and Management, Springer, vol. 4(4), pages 343-368, December.
    37. Uri Gneezy & John A List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," Econometrica, Econometric Society, vol. 74(5), pages 1365-1384, September.
    38. James Andreoni & B. Douglas Bernheim, 2009. "Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects," Econometrica, Econometric Society, vol. 77(5), pages 1607-1636, September.
    39. Armin Falk, 2007. "Gift Exchange in the Field," Econometrica, Econometric Society, vol. 75(5), pages 1501-1511, September.
    40. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-851, September.
    41. Strassmair, Christina, 2009. "Can intentions spoil the kindness of a gift? - An experimental study," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 302, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    42. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
    43. Sun, Xiaoyun & Jackson, Sukhan & Carmichael, Gordon A. & Sleigh, Adrian C., 2009. "Prescribing behaviour of village doctors under China's New Cooperative Medical Scheme," Social Science & Medicine, Elsevier, vol. 68(10), pages 1775-1779, May.
    44. Peter T. Leeson, 2008. "Social Distance and Self-Enforcing Exchange," The Journal of Legal Studies, University of Chicago Press, vol. 37(1), pages 161-188, January.
    45. Bohnet, Iris & Frey, Bruno S., 1999. "The sound of silence in prisoner's dilemma and dictator games," Journal of Economic Behavior & Organization, Elsevier, vol. 38(1), pages 43-57, January.
    46. Michel Marechal & Christian Thoni, 2007. "Do managers reciprocate? Field experimental evidence from a competitive market," Natural Field Experiments 00310, The Field Experiments Website.
    47. Kranton, Rachel E, 1996. "The Formation of Cooperative Relationships," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(1), pages 214-233, April.
    48. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kandul, Serhiy & Lanz, Bruno & Reins, Evert, 2023. "Reciprocity and gift exchange in markets for credence goods," Games and Economic Behavior, Elsevier, vol. 141(C), pages 52-69.
    2. Johnsen, Åshild A. & Kvaløy, Ola, 2021. "Conspiracy against the public - An experiment on collusion11“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publ," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 94(C).
    3. Ulrike Malmendier & Klaus M. Schmidt, 2017. "You Owe Me," American Economic Review, American Economic Association, vol. 107(2), pages 493-526, February.
    4. Brock, J. Michelle & Lange, Andreas & Leonard, Kenneth L., 2018. "Giving and promising gifts: Experimental evidence on reciprocity from the field," Journal of Health Economics, Elsevier, vol. 58(C), pages 188-201.
    5. Li, Mingqiang & Li, Zhihui & Yip, Chi-Man (Winnie), 2022. "Informal payments and patients’ perceptions of the physician agency problem: Evidence from rural China," Social Science & Medicine, Elsevier, vol. 298(C).
    6. Johnsen, Åshild Auglænd, 2017. "Conspiracy against the public - an experiment on collusion," Working Paper Series 03-2017, Norwegian University of Life Sciences, School of Economics and Business.
    7. Jiang, Shuguang & Wei, Qian, 2022. "Confucian culture, moral reminder, and soft corruption," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    8. Michel André Maréchal & Christian Thöni, 2019. "Hidden Persuaders: Do Small Gifts Lubricate Business Negotiations?," Management Science, INFORMS, vol. 65(8), pages 3877-3888, August.
    9. Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2014. "Addressing antibiotic abuse in China: An experimental audit study," Journal of Development Economics, Elsevier, vol. 110(C), pages 39-51.
    10. Chen, Zeyang & Lin, Wanchuan & Meng, Juanjuan, 2022. "Does gift competition hurt? An experimental study of multilateral gift exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 260-275.
    11. Stefan Palan & Michael Kirchler, 2014. "Friendliness pays off! Monetary and Immaterial Gifts in Consumer-Salesperson Interactions," Working Papers 2014-31, Faculty of Economics and Statistics, Universität Innsbruck.
    12. Pinghan Liang & Juanjuan Meng, 2023. "Paying it forward: an experimental study on social connections and indirect reciprocity," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 387-417, June.
    13. Michael Kirchler & Stefan Palan, 2018. "Immaterial and monetary gifts in economic transactions: evidence from the field," Experimental Economics, Springer;Economic Science Association, vol. 21(1), pages 205-230, March.
    14. Wei Zhao & Qianqian Ben Liu & Xitong Guo & Tianshi Wu & Subodha Kumar, 2022. "Quid pro quo in online medical consultation? Investigating the effects of small monetary gifts from patients," Production and Operations Management, Production and Operations Management Society, vol. 31(4), pages 1698-1718, April.
    15. Rose, Julia & Kirchler, Michael & Palan, Stefan, 2023. "Status and reputation nudging," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    16. Haiqin Ju & Jia Chen & Jingwen Xu & Hongxiao Zhang, 2022. "How Do Non-Agricultural Employment and Regional Selection Affect Farmers’ Domestic Sewage Discharge Behavior? Empirical Evidence from Rural China," IJERPH, MDPI, vol. 19(17), pages 1-14, August.
    17. Pan, Xiaofei & Xiao, Erte, 2016. "It’s not just the thought that counts: An experimental study on the hidden cost of giving," Journal of Public Economics, Elsevier, vol. 138(C), pages 22-31.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liang, Pinghan & Meng, Juanjuan, 2013. "Love me, love my dog: an experimental study on social connections and indirect reciprocity," MPRA Paper 45270, University Library of Munich, Germany.
    2. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    3. Kocher, Martin G. & Luhan, Wolfgang J. & Sutter, Matthias, 2012. "Testing a forgotten aspect of Akerlof’s gift exchange hypothesis: Relational contracts with individual and uniform wages," Discussion Papers in Economics 12816, University of Munich, Department of Economics.
    4. Stefan Palan & Michael Kirchler, 2014. "Friendliness pays off! Monetary and Immaterial Gifts in Consumer-Salesperson Interactions," Working Papers 2014-31, Faculty of Economics and Statistics, Universität Innsbruck.
    5. Fortuna Casoria & Arno Riedl, 2013. "Experimental Labor Markets And Policy Considerations: Incomplete Contracts And Macroeconomic Aspects," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 398-420, July.
    6. Boosey, Luke & Goerg, Sebastian, 2020. "The timing of discretionary bonuses – effort, signals, and reciprocity," Games and Economic Behavior, Elsevier, vol. 124(C), pages 254-280.
    7. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    8. Simon Gächter & Esther Kaiser & Manfred Königstein, 2024. "Incentive contracts crowd out voluntary cooperation: Evidence from gift-exchange experiments," Discussion Papers 2024-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    9. Fortuna Casoria & Arno Riedl, 2013. "Experimental Labor Markets And Policy Considerations: Incomplete Contracts And Macroeconomic Aspects," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 398-420, July.
    10. Michael Kirchler & Stefan Palan, 2018. "Immaterial and monetary gifts in economic transactions: evidence from the field," Experimental Economics, Springer;Economic Science Association, vol. 21(1), pages 205-230, March.
    11. Pinghan Liang & Juanjuan Meng, 2023. "Paying it forward: an experimental study on social connections and indirect reciprocity," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 387-417, June.
    12. James Andreoni, 2018. "Satisfaction Guaranteed: When Moral Hazard Meets Moral Preferences," American Economic Journal: Microeconomics, American Economic Association, vol. 10(4), pages 159-189, November.
    13. Michel André Maréchal & Christian Thöni, 2019. "Hidden Persuaders: Do Small Gifts Lubricate Business Negotiations?," Management Science, INFORMS, vol. 65(8), pages 3877-3888, August.
    14. Bharat Chandar & Uri Gneezy & John A. List & Ian Muir, 2019. "The Drivers of Social Preferences: Evidence from a Nationwide Tipping Field Experiment," NBER Working Papers 26380, National Bureau of Economic Research, Inc.
    15. Brandes, Leif & Franck, Egon, 2012. "Social preferences or personal career concerns? Field evidence on positive and negative reciprocity in the workplace," Journal of Economic Psychology, Elsevier, vol. 33(5), pages 925-939.
    16. Chen, Zeyang & Lin, Wanchuan & Meng, Juanjuan, 2022. "Does gift competition hurt? An experimental study of multilateral gift exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 260-275.
    17. Becker, Johannes & Hopp, Daniel & Süß, Karolin, 2020. "How altruistic is indirect reciprocity? - Evidence from gift-exchange games in the lab," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224592, Verein für Socialpolitik / German Economic Association.
    18. Tetsuo Yamamori & Kazuyuki Iwata, 2023. "Wage claim detracts reciprocity in labor relations: experimental study of gift exchange games," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(3), pages 573-597, July.
    19. Alain Cohn & Ernst Fehr & Lorenz Goette, 2015. "Fair Wages and Effort Provision: Combining Evidence from a Choice Experiment and a Field Experiment," Management Science, INFORMS, vol. 61(8), pages 1777-1794, August.
    20. Simon Gaechter & Esther Kessler & Manfred Koenigstein, 2011. "The roles of incentives and voluntary cooperation for contractual compliance," Discussion Papers 2011-06, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:107:y:2013:i:c:p:19-30. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.