Biases influence holiday gifting

One of the things that makes holidays simultaneously fun and stressful is gift-giving. Behavioral economists in Carnegie Mellon’s Dietrich College of Humanities and Social Sciences have been studying the art of good gift selection and the disconnects that arise between the person choosing the gift and the person receiving the gift.

Behavioral economics is the interdisciplinary field of economics and psychology that aims to understand how people can be “predictably irrational” and factor human emotion and behavior in understanding how economic systems work. At Carnegie Mellon University, behavioral economists are looking to answer some very complex and important questions. They are studying the reasons behind our consumption of unhealthy food, better ways of non-abstinence based sex education, and gender discrimination in the workplace.

On studying what makes a gift a good gift, researchers found that projection bias and attribution bias have big roles to play in how we select the gifts that we do.

Projection bias is the cognitive process of overestimating how much other people agree with us, i.e., our own opinions of the gift interfering with what the other person might actually think of it. Simply put, just because a person likes Taylor Swift’s newest album and would be thrilled to get it as a record, doesn’t mean that they should purchase it for their uncle.

Attribution bias is a bias that exists because of our own inability to perceive things objectively. Kareem Haggag, an assistant professor in the Social and Decision Sciences Department explains, “Our work on attribution bias is about evaluations we make of past experiences with an item and, specifically, our failure to fully account for our temporary states — thirst, fatigue, etc. — that could have affected enjoyment. For example, if you happened to sample a restaurant when you were extremely hungry, you might later overrate it because you failed to account for just how important being extremely hungry played in that experience.”

With understanding these two biases comes the realization that we aren’t actually very good at knowing what our family and friends really want. Perhaps, giving them exactly what they asked for would be a more successful strategy.

Shereen J. Chaudhry (Dietrich College Class of 2013) wrote a dissertation with George Loewenstein — the Herbert A. Simon University Professor of Economics and Psychology in the Dietrich College of Humanities and Social Sciences and co-founder of the field of behavioral economics for the Behavioral Decision Research Program titled — “Thanking, Apologizing, Bragging and Blaming: The Currency of Communication.” Chaudhry explains that the appreciation we received for a gift in the past is proportional to the time we spend on picking a gift the next holiday season. While it seems pretty normal to thank someone for their gift to you, the importance of expressing appreciation is vastly underrated in terms of establishing healthy relationships.

She says, “with gift-giving, the desire is often to deepen the connection with and to impress the recipient, to show the recipient that the giver is a valuable partner or friend,” she continued, “though it may be difficult for some people to admit, this means that, in many, if not most, cases of gift-giving, our generous motives are mixed with self-interested motives.
Rather than taking this as depressing news, realize that this highlights the importance thanking can have in maintaining and deepening relationships.”

Jeff Galak from the Tepper School of Business reveals that gift-givers are more focused on the immediate moment of gift-giving whereas gift-receivers are more interested in the long-term benefits of the gift. Galak, an associate professor in marketing explains, “we are seeing a mismatch between the thought processes and motivations of gift givers and recipients. Put another way, there may be times when the vacuum cleaner, a gift that is unlikely to wow most recipients when they open it on Christmas day, really ought to be at the top of the shopping list as it will be well used and liked for a long time.”