Sunday, April 15, 2007

The Economics of Gifts (A Guide for Guys)

A while back, it was brought to my attention that girls may view gifts differently from the guy who's giving the gifts. For guys, our perception of the gifts we give can be presented as follows:

U = A(t1)C1 + A(t2)C2 + ... + A(tn)Cn

Where

  • U = utility derived by the girl (i.e. number of brownie points scored by the guy)
  • Cn = monetary/time cost of "n-th" gift; Cn <1
  • A(tn) is a function (different for every girl) that is dependant on the timing of the "n-th" gift (e.g. Valentines Day, Birthday, Anniversary, random day, etc.)


In reality, the U perceived by the girl may be more:

U = A(t1)(B+0.1C1) + A(t2)(B+0.1C2) + ... + A(tn)(B+0.1Cn),

where B>1.


With reference to the first equation, guys usually think that they can give 01 x gigantic present (high C) to leverage on the A(tn) and get the biggest bang for their buck/time. They also assume that A(tn) is diminishing in n and hence try not to give too many presents due to the diminishing marginal utility.

However, if the second equation is true, then we guys really need to re-work the strategy and skew it more towards quantity since gifts with a high C will not be able to affect U that much in the long run if n is pitifully small.

Apologies for the lack of proper subscripts. I'm having trouble formatting on blogger.

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