Is PS100 a good choice for a wedding gift? One bride asked her guests for an increase in their cash gifts. The story sparked lively debates about how much money to spend on gifts for newlyweds. Many people commented on Guardian’s website that they believed it was up to the giver and that the recipient should be grateful for the gift she received.

This isn’t a question of etiquette. Economists can give a more specific answer. Economists have placed prices on sacred items such as human life and law-abiding people.

Neuroscience and psychology insights make it possible to model human decision-making economically. This goes beyond the assumption that everyone wants more money. This includes fairness and reciprocity, guilt, altruism, and guilt.

These moral considerations are modeled in economics. An individual is assumed to have an exchange rate between their money and others. This is known as the “marginal rate of substitution” by economists. It can also be used to compare two goods. Rates are dependent on many factors, including financial status and relationships between people (in the example of the present wedding guest who had just inherited funds and wondered if the bride and groom would get more span>

When you transfer money to someone else, the exchange rate drops. You don’t have to “pass on” cash in real life. You can make it happen by deciding the amount of your wedding gift. Let’s assume you start with PS30. This might seem tight, but you should increase it up to PS40. Perhaps PS50? You will not consider larger amounts if the exchange rate between your payoff amount and the couple falls below 1. This will continue until you decide to retain the How marginal rate for substitution. 

This example illustrates how the economic model of “other-regarding variables” can be applied in basic economics. It can be difficult to determine the correct amount for a wedding gift using this abstract method since we don’t always know the exchange rate between our money and another person’s money. Economics shows that expectations and reciprocity can affect the gift amount.

Promises and Expectations

The desire to fulfill expectations is often the driving force behind human activity. Recently, economic analysis has taken this observation into account. If they act against a personal or social standard, people feel guilty. A person may feel guilty if they are responsible for a loss of “payoff” to another agent. If guests attend a wedding and contribute less than expected, they may feel guilty. It can be awkward to receive a gift voucher worth three figures for a couple. A Guardian reader said, “It would be extremely awkward to receive an extravagant gift span>

How can expectations be created most effectively? It is possible to promise or imply that you will fulfill the expectation. According to economic studies, verbally agreeing to contribute to a common fund raises future contributions. Even if communication isn’t binding, and even though the promise (and donations) are made anonymously to an unrelated individual via an impersonal computer interface, this happens.

In their now-infamous email, the newlywed couple impliedly promised a “warm wish”. “We were shocked at your contribution did not seem to match our warmth for our big day.” The bride and groom may feel upset if the guest had promised to pay the downpayment for the couple’s first home. The bride is acting rudely since this doesn’t appear to be true. Many commentators agree.

Gift exchange

Another way to determine the worth of a wedding gift is through the economic theory of “gift exchanging”. People are generous every day. This is well-known. Economic situations are more likely to see this behavior. Even if they are not being rewarded with a salary bonus, many employees will work overtime to earn that bonus. Many wedding guests use similar logic to give “a sum that is near what the couple would pay for me/us to be there,” as many commenters have explained.

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