What is GiftGiving? Particularly as an alternative to exchange.

Most conceptions seem to imply that gifting is not a neutral and anonymous activity. Several things seem to be in place.

  • it implies an awareness of the wants or needs of the receiver. In some cultures, having to be asked to give is seen as a failure, "what? you didn't perceive my need?" (See also my ideas on teaching in ArnoldKlingOnMovingToTheRightOutsideAcademia)
  • this social connection is not alienated. It's personal.
  • there's an implied reciprocity. For example, when some indigenous people (or anthropologists) say the earth gives gifts this is meant to bind humanity into some relationship and sense of responsibility for it.

: but this raises the question : what's the difference between reciprocity and exchange? Why isn't exchange just the more refined version of expecting reciprocity?

** reciprocity doesn't imply returning to the giver. You can pass the gift on to someone else, so keep the cycle going

** reciprocity doesn't imply calculating an equal exchange. You return (or pass on) what you can, when you can. The lack of getting equal exchange isn't a "deal breaker". (This is why (I think, based on a little bit of corroboration from Optimaes) that gifts can outperform exchange.)

Dichotomy or spectrum

I'm incluned to say there's a potential spectrum rather than dichotomy between "gift-giving with an expectation of reciprocity to someone at some time in the future" and "exchange which demands an equivalent return, now". I call this spectrum one of "tightness" or "looseness" of "accounting". Exchange is the most tightly accounted relation. Gifts are more loosely accounted.

There's also a spectrum of personal aquaintance. It's possible to put all sort of economic relations into these spectra :

  • Ordinary money exchanges in local communities (credit from the village shop),
  • LocalCurrencies (more exchange oriented but with more personal aquaintance and maybe more, looser negotiation for prices)
  • gifts with various degrees of looseness of accounting

See also : FalseDichotomies


Now, of course, anyone will notice immedietely that any leeway or looseness of accounting opens up room for exploitation by "cheats" who take more than they reciprocate, sometimes deliberately. And, if you're schooled in GameTheory and particularly the PrisonersDilemma, you'll know that what's called ReciprocalAltruism normally needs to be policed by all parties who will, after a while, refuse any more co-operation or altruism towards such cheats.

Without such "provocability" (RobertAxelrod's term) cheating will predominate. The most successful strategy is, of course TitForTat, which is "nice" (ie. starts with goodwill and co-operation) but will retaliate by not co-operating if defected against. One way of understanding the success of TFT is that it is a very "tightly" accounting strategy. It looks no further than the last match between players and will only resume co-operation when a defecting opponent also resumes. TFT never lets itself be more than one match down on the opponent.

One way of looking at this is that the success of TFT seems to justify tight-accounting. Tight-accounting makes sense because it is sustainable in the face of uncertainty (including potential cheaters). Tight-accounting is what makes sure you are never too much in debt or credit, and no-one will take too much away from you without reciprocating.

And hence, a tighter accounting system, one which demands payment up-front (or within 30 days), is going to be more robust against cheats, and therefore (more importantly) scale-up to larger numbers of participants accross larger geographic distances. This is the real virtue of tight-accounting exchange systems. They scale. And scaling brings more wealth, because more people involved in the economy bring more different skills, and knowledge, and resources, and potentials for DivisionOfLabour and persons with ComparativeAdvantage to do the thing they're best at.


KristinLindgren has a model which shows that actually, if you allow memory (and complexity) of IPD playing agents to evolve, TFT isn't permanent. More complex strategies evolve, which can might be either harsher or more loosely accounted. In a noisy environment complexity flourishes.

Possibly (though this isn't Lindgren's claim) looseness flourishes too.