Every day, millions of shoppers hit the stores in
full force-both online and on foot-searching
frantically for the perfect gift. Last year, Americans
Linespent over $30 billion at retail stores in the month of
*5*December alone. Aside from purchasing holiday
gifts, most people regularly buy presents for other
occasions throughout the year, including weddings,
birthdays, anniversaries, graduations, and baby
showers. This frequent experience of gift-giving can
*10*engender ambivalent feelings in gift-givers. Many
relish the opportunity to buy presents because
gift-giving offers a powerful means to build stronger
bonds with one`s closest peers. At the same time,
many dread the thought of buying gifts; they worry
*15*that their purchases will disappoint rather than
delight the intended recipients.
Anthropologists describe gift-giving as a positive
social process, serving various political, religious, and
psychological functions. Economists, however, offer
*20*a less favorable view. According to Waldfogel (1993),
gift-giving represents an objective waste of resources.
People buy gifts that recipients would not choose to
buy on their own, or at least not spend as much
money to purchase (a phenomenon referred to as
*25*``the deadweight loss of Christmas"). To wit, givers
are likely to spend $100 to purchase a gift that
receivers would spend only $80 to buy themselves.
This ``deadweight loss" suggests that gift-givers are
not very good at predicting what gifts others will
*30*appreciate. That in itself is not surprising to social
psychologists. Research has found that people often
struggle to take account of others` perspectives-
their insights are subject to egocentrism, social
projection, and multiple attribution errors.
*35* What is surprising is that gift-givers have
considerable experience acting as both gift-givers and
gift-recipients, but nevertheless tend to overspend
each time they set out to purchase a meaningful gift.
In the present research, we propose a unique
*40*psychological explanation for this overspending
problem-i.e., that gift-givers equate how much they
spend with how much recipients will appreciate the
gift (the more expensive the gift, the stronger a
gift-recipient`s feelings of appreciation). Although a
*45*link between gift price and feelings of appreciation
might seem intuitive to gift-givers, such an
assumption may be unfounded. Indeed, we propose
that gift-recipients will be less inclined to base their
feelings of appreciation on the magnitude of a gift
*50*than givers assume.
Why do gift-givers assume that gift price is closely
linked to gift-recipients` feelings of appreciation?
Perhaps givers believe that bigger (i.e., more
expensive) gifts convey stronger signals of
*55*thoughtfulness and consideration.According to
Camerer (1988) and others, gift-giving represents a
symbolic ritual, whereby gift-givers attempt to signal
their positive attitudes toward the intended recipient
and their willingness to invest resources in a future
*60*relationship. In this sense, gift-givers may be
motivated to spend more money on a gift in order to
send a "stronger signal" to their intended recipient.
As for gift-recipients, they may not construe smaller
and larger gifts as representing smaller and larger
*65*signals of thoughtfulness and consideration.
The notion of gift-givers and gift-recipients being
unable to account for the other party`s perspectives
seems puzzling because people slip in and out of
these roles every day, and, in some cases, multiple
*70*times in the course of the same day. Yet, despite the
extensive experience that people have as both givers
and receivers, they often struggle to transfer
information gained from one role (e.g., as a giver)
and apply it in another, complementary role (e.g., as
*75*a receiver). In theoretical terms, people fail to utilize
information about their own preferences and
experiences in order to produce more efficient
outcomes in their exchange relations. In practical
terms, people spend hundreds of dollars each year on
*80*gifts, but somehow never learn to calibrate their gift
expenditures according to personal insight.