Social Econ Blog

Part of the process of developing and maintaining relationships involves gift giving. Why? There are lots of reasons, I am sure, but here is a very simplistic use of economic tools which offers a compelling explanation.

For simplicity, I will just describe gift giving while courting. Two people, Dave and Diana, are getting to know each other. Dave realizes that he quite likes Diana and would like to keep seeing her. He wants to let Diana know how he feels. He's said it too her, but talk is cheap. Diana has heard how great she is from lots of suitors. Dave wants to strongly signal his interest. What can he do?

He can give Diana a gift. By giving Diana a gift, Dave signals Diana that he is enjoying a large net benefit from being with her (that is, the benefits of the time he spends with her exceed the costs). Dave would not be willing to spend resources signaling his affection if he were only marginally interested. Diana realizes that Dave would not want to spend resources if he were only marginally interested, and thus now trusts that he is really interested (of course there is the looming question about what exactly Dave is interested in, but, for now, assume that Dave is an upstanding young gentleman).

What exactly should Dave give?

This article suggests that he should give "an extravagant gift that has no resale value." This is because "women feel confident that they have found a strong and committed mate when they receive an extravagant gift. And men avoid gold-diggers by giving only gifts that have no intrinsic value."

I agree with this premise in many ways, but I actually have some slightly different views on what kinds of gifts Dave should give. I will save this discussion for class, but feel free to discuss your own thoughts on gift giving in the comments.