The Paradox of Gift Giving: More Not Better

December 12, 2011

shopping bags

istockphoto

Holiday shoppers, take note. Marketing and psychology researchers have found that in gift giving, bundling together an expensive “big” gift and a smaller “stocking stuffer” reduces the perceived value of the overall package for the recipient.

Suppose you’re trying to impress a loved one with a generous gift this holiday season, says Kimberlee Weaver, assistant professor of marketing in the Pamplin College of Business. One option is to buy them a luxury cashmere sweater. A second option is to add in a $10 gift card.

If their budget allows, most gift givers would choose the second option, as it comprises two gifts — one big, one small, Weaver says. Ironically, however, the gift recipient is likely to perceive the cashmere sweater alone as more generous than the combination of the same sweater and gift card. “The gift giver or presenter does not anticipate this difference in perspectives and has just cheapened the gift package by spending an extra $10 on it.”

Weaver is part of a research team that recently discovered, through a series of studies, what the team has called the “Presenter’s Paradox.” The paradox arises because gift givers and gift recipients have different perspectives, Weaver says. Gift givers follow a “more-is-better” logic; recipients evaluate the overall package.

“People who evaluate a bundle, such as a gift package, follow an averaging strategy, which leads to less favorable judgments when mildly favorable pieces (the gift card) are added to highly favorable pieces (the sweater). The luxury sweater represents a generous ‘big’ gift. Adding on a ‘little’ gift makes the total package seems less big.”

The same contradictory effect can be found in other situations, says Weaver, whose research article, “The Presenter’s Paradox,” co-authored with Stephen Garcia and Norbert Schwarz of the University of Michigan, has been accepted for publication in the Journal of Consumer Research.

“People who present a bundle of information assume that every favorable piece adds to their overall case and include it in the bundle they present,” she says. However, notes Garcia, associate professor of psychology and organizational studies at the University of Michigan, “this strategy backfires, because the addition of mildly favorable information dilutes the impact of highly favorable information in the eyes of evaluators. Hence, presenters of information would be better off if they limited their presentation to their most favorable information — just as gift givers would be better off to limit their present to their most favorite gift.”

Source:Virginia Tech (Virginia Polytechnic Institute and State University)

Previous post:

Next post: