Fairness versus Efficiency - An Experimental Study of (Mutual) Gift Giving

Fairness is a strong concern as shown by dictator and ultimatum experiments. Efficiency, measured by the sum of individual payoffs, is a potentially competing concern in games such as the prisoners' dilemma. In our experiment participants can increase efficiency by gift giving. In the one-sided treatment this is only possible for one of two partners. The tow-sided treatment allows for mutual giving. In both cases decisions can be conditioned on whether there is or there is not an efficiency fain by gift giving. Our results indicate that efficiency concerns are dominated by fairness concerns that are less stringent in mutual exchanges than in one-sided gift relationships.