You Owe Me

Abstract

The exchange of small and medium sized gifts is common practice in many industries. We focus on situations where the receiver of the gift has to take a decision on behalf of a third party and where the gift giver wants to influence this decision. Examples include physicians who receive gifts from the pharmaceutical industry and take decisions on behalf of their patients or politicians who receive gifts from lobbyists and take decisions on behalf of their voters. It is often argued that it is not the gift that influences the decision but rather the information that is provided in conjunction with the gift. We conduct an experimental study to test this hypothesis. In our experiment the gift has no informational content. It is given unconditionally and in a one-shot relationship. Most models of fairness and reciprocity predict that the gift should not influence the decision maker. Nevertheless, we find that gifts have a large impact on the decision maker to the detriment of his client, even though decision makers understand that the gift has been given to influence their behavior. We study whether this effect can be mitigated by disclosure, by limiting the size of the gift, and by offering additional incentives to the decision maker.