How Gift Prices Affect Gratitude? “Right” Gift-Price Effect

Abstract

This research examines the effects of gift prices on recipients’ gratitude. Five studies show an inverted U-shaped relationship between gift price and recipients’ gratitude. Recipients are more likely to appreciate gifts of monetary value that align with their expectations than inexpensive or expensive gifts whose values do not meet the recipients’ expectations. Two parallel underlying mechanisms explain the inverted U-shaped relationship: when gift prices are lower than expected, recipients perceive givers as inconsiderate, and when gift prices are higher than expected, recipients feel indebted. Additionally, we examine two boundary conditions. Compared to North Americans, Asians are more likely to show an inverted U-shaped relationship. In addition, close friends, rather than distant friends, are more likely to show an inverted U-shaped relationship. The paper concludes with a discussion of contributions to the literature on gift-giving and practical implications.