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Mostly, reciprocity is seen as a positive act. It helps people to cooperate and to engage in mutually beneficial exchange. KLAUS M. SCHMIDT, however, is interested in the negative aspects of reciprocity, for instance when a decision maker is offered a gift by an interested party. His research is focused on two aspects: Why do people reciprocate? And are the remedies discussed, such as disclosure and size limits, really effective measures? As he relates in this video, his research group set up a controlled lab experiment to tackle these questions. In different treatments, varying gift sizes and disclosure, they found that most people reciprocate when given a gift (or not given a gift) but that increasing gift size or disclosure of the gift giving has little effects on the reciprocity of the decision maker. From these results, the researchers were able to propose a new theory to explain reciprocal behavior.


Klaus M. Schmidt is Full Professor of Economics at the Ludwig-Maximilians-Universität Munich. He was also Visiting Professor at Harvard University, University of California at Berkeley, Yale University and Stanford University. His research interests include contract theory, game theory, and behavioral economics. Among his advisory duties is that of Corresponding Member of the Council of the Lindau Nobel Laureate Meetings and that of member of the Advisory Board of the German Federal Minister for Economics and Technology. He has also been editor for a number of journals and is currently Senior Editor of Economic Policy. Since 2005, he is Member of the Berlin-Brandenburg Academy of Sciences.


Original publication

You Owe Me

Malmendier Ulrike and Schmidt Klaus
American Economic Review
Published in 2017