The Magic of the Personal Touch: Field Experimental Evidence on Money and Appreciation as Gifts*

Abstract

In this paper, we use two field experiments in professional settings to explore the effort levels of individuals in response to gifts. We extend the literature by looking at non‐financial gifts that signal worker appreciation and gifts that combine financial and non‐financial elements with or without a personal touch. We find that while money and appreciation are individually effective, these only work well together when they are combined with a personal touch. This suggests that responses to gifts are sensitive to the presentation of the gift as well as to interpersonal elements; these are factors that have so far been largely ignored in the literature but are easy to incorporate into existing principal–agent models.

The effect of payment medium on effort

“…We assigned participants to the treatments by sessions. Kube et al (2012) and Bradler and Neckermann (2019) find an effect size of around 0.45 when testing the effects of monetary versus non-monetary incentives. We take the effect size in these studies as the basis for our power calculations.…”

“…2 However, in terms of the physical appearance, they look more like gift cards as they do not have card number, cardholder name, chips, or the names of international payment networks, such as VISA or MasterCard on them. To the best of our knowledge, no prior studies compared the forms of monetary incentives, while there have been studies comparing monetary and non-monetary incentives (Heyman and Ariely [2004], Kube et al [2012], Bradler and Neckermann [2019]). Comparing the effect of different payment mediums, in addition to well-studied comparison of monetary versus nonmonetary payments, is necessary since it is more common to provide monetary incentives in different forms than providing non-monetary incentives in economics experiments and in labour market.…”

“…Notably Heyman and Ariely (2004) illustrate that monetary incentives provide cues about a "money-market relationship", which cause participants to act according to market norms. In contrast, nonmonetary incentives, such as candy, provide cues about a "social-market relationship" which cause participants to act according to social norms (Bowles & Polanía-Reyes, 2012;Bradler & Neckermann, 2019;Heyman & Ariely, 2004). Studies by Kube et al (2012), Cao et al (2020) and Bradler and Neckermann (2019) have shown that a special framing of monetary incentives can influence behavior.…”

“…In contrast, nonmonetary incentives, such as candy, provide cues about a "social-market relationship" which cause participants to act according to social norms (Bowles & Polanía-Reyes, 2012;Bradler & Neckermann, 2019;Heyman & Ariely, 2004). Studies by Kube et al (2012), Cao et al (2020) and Bradler and Neckermann (2019) have shown that a special framing of monetary incentives can influence behavior. Specifically, these studies report that providing the monetary (cash) reward in a gift form increases productivity under a fixed payment scheme, just like non-monetary incentives.…”

Subjective Age and the Greater Good

“…We used this giving behavior as a proxy of prosocial behavior, as prior research has indicated that the expression of gratitude communicates a prosocial state (Grant & Gino, 2010;Tsang, 2006), acknowledges a responsibility to others (Alspach, 2009), and is associated with prosocial behavior such as providing help to strangers (Bartlett & DeSteno, 2006;Lazarus & Lazarus, 1994;Nowak & Roch, 2007). Accordingly, the act of writing thank you cards (or giving other gifts that show gratitude) is a proxy of prosocial behavior (Bradler & Neckermann, 2019;Carson, Muir, Clark, Wakely, & Chander, 2012;Froh et al, 2014). To further magnify the prosocial benefit that participants could bestow by giving thanks, participants learned that each thank you card that they gave to a recipient would give the recipient an added chance of winning a financial prize.…”