“Does Gift Exchange Generate Externalities? A Field Experiment on Physician-patient Relationship in China ” by Juanjuan Meng
This paper asks whether gift exchange generates externalities for people outside of the bilateral relationship between the gift giver and recipient, and whether this relationship depends on social networks. We examine this question in the context of a field experiment in Chinese hospital outpatient clinics. In our experiment, two patients visit the same physician in sequence, first A and then B. We adopt a 2×2 design that varies depending on whether patient A gives a gift to the physician or not, and on whether patient A introduces patient B as his/her friend or not. We find that when patient A gives a gift, he/she receives better service, and is less likely to be prescribed unnecessary and costly antibiotics. When patient A introduces patient B as a friend, patient B is also more likely to receive better service and less likely to be prescribed costly drugs. Conversely, if B is not introduced, B receives worse service when A has given a gift. These results are the first to demonstrate in a field setting that gift giving can generate either positive or negative externalities for third parties, depending on the social distance between the gift giver and the third party.